Monthly carrying costs can include the mortgage payment, real estate taxes, operating expenses, lender-required reserves, interior, and exterior maintenance, sewer, water, trash pick-up, recycling, cable TV, heat, and air conditioners.
Is carrying cost an expense?
Yes, carrying costs is an expense. However, it rarely appears as an expense account or a line in your income statement. Instead, the carry cost of inventory appears on the income statement under several named accounts, such as warehouse insurance expenses.
Inventory carrying cost definition in accounting is one of the most significant expenses for retail, so it’s essential to accurately calculate the inventory holding cost and the value of those products. In addition, it’s easier to measure profit by item once you deduct that cost.