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Thread: Cost of Sales - Freight & Delivery

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    Cost of Sales - Freight & Delivery

    Good day,

    I have a small business and recently been awarded contract to supply petrol.
    I buy the petrol at wholesale price from sasol and sell to my customers
    I also have a 3rd party that then transport the petrol from sasol refinery to my clients depo (where client takes delivery)

    Case:
    How do i record the transport cost?
    Is part of Cost of Sales (can i add it to the sasol cost) as total Cost of Sales? OR Do I record separately under Expenses?

    Regards

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    It depends on your personal needs. The whole purpose of accounting (first of all) is that it would be a management tool. So first decide what you need to see to help you make budgeting decisions. Do you need to see it in your gross profit or in your nett profit? Personally I think it is such an integral part of your cost of sales, that it should already be included in your gross profit calculation. I mean, it's not as if you can sell your product without it, is it?

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    Thanks, and NO i can not sell if product is not delivered to client depo

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