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WAEC Financial Accounting 2023 Question 13

Question 13

Final Accounts of a Sole Trader

The reason for treating carriage inwards in the trading account is because

  1. A.it is an expense on goods sold to customers.
  2. B.carriage outwards is an expense item in the profit and loss account.
  3. C.it does not appear in the balance sheet.
  4. D.it is an expense on goods purchased.
Show the answer and explanation

Answer: D (it is an expense on goods purchased.)

Explanation

Carriage inwards is part of the cost of bringing purchases in, so it adds to cost of sales.