Asset and expense accounts appear on the debit side of the trial balance whereas liabilities, capital and income accounts appear on the credit side. debit and credit - Free download as Powerpoint Presentation (.ppt), PDF File (.pdf), Text File (.txt) or view presentation slides online. Such charges paid in connection with adult goods purchased are considered as direct expenses and are debited to Trading Account. Debit (RM) 22,860 5,100 Credit (RM) 41,000 Particulars Purchases and sales Inventory on 1 April 20x2 Capital Bank overdraft Cash 8,170 4,300 140 930 1,440 790 570 2,180 450 Discount allowed and received Returns inwards and outwards Carriage outwards Office expenses Fixtures and fittings Delivery van Accounts receivable and . Definition of Carriage Inwards. Copy. Non current asset disposals. Please calculate the return inward and make a journal entry. 9 people helped. These accounts will be recorded at debit side if it's decrease in value: Income; Capital; Liabilities. goods carriage, located in the taxable territory shall be treated as the person who receives the . TS Grewal Accountancy Class 11 Solutions Chapter 3 Accounting Procedures Rules of Debit and Credit. Interest paid It is the statement which consist of debit and credit sides to present the closing balance of the accounts to identify if the records maintained are effective or if there is any . 717 1,360 13,225 Deposits 2,500 15,725 Cheque No.719 3,400 12,325 Bank charges 50 12,375 Carriage Outwards - Is the cost of transport of goods out of the firm to its customers While carriage outwards refer to those expenses which the supplier has to incur when he or she sells to the final customer because transportation from supplier's warehouse to the doorstep of customer also entails expenses. Since sales have a credit balance, sales return would have a debit balance. Tamil Nadu Board of Secondary Education HSC Commerce Class 11th. . Return inwards. . Adjustments revision. State whether the balance of the following accounts should be placed in the debit or the credit column of the trial balance: (i) Carriage outwards (ii) Carriage inwards (iii . Carriage outwards 2 . It is prepared to prove that the total of accounts with a debit balance is equal to the total of accounts with a credit balance in the company. The value of the goods in inventory at the year end was $15,400. Particulars DEBIT (RM) CREDIT (RM) Purchases and Sales 22,860 41,000 Inventory on 1 April 2018 5,100 Capital 8,170 Bank overdraft 4,300 Cash 140 Discount allowed and received 1,440 930 Returns inwards and outwards 790 570 Carriage outwards 2,180 Office expenses 450 Fixtures and fittings 1,210 Delivery van 2,000 . TS Grewal Accountancy Class 11 Solutions Chapter 3 Accounting Procedures Rules of Debit and Credit. March 6 Goods purchased for cash Rs 5,00,000 at 20% trade discount . What is the normal balance for Carriage outwards? AmandaCavanagh TEACHER. Pages 6 Since, both the amounts are recorded as expenses, they will have a debit balance and therefore, in the Trial Balance also, they will be shown in the debit column . Question: 19. When it is paid on purchase of an asset it is added in the amount of concerned asset (shown in the Balance Sheet-Asset Side). Problem 2. The most appropriate accounting treatment of carriage inwards is to include it in the . 1 500. Return outwards is the return back of goods by a buyer to the seller from whom they were originally purchased. Carriage outward is shown in the debit side of profit and loss account because these expenses are paid for taking out goods from the factory to the market. a) All above items depict debit balances b) All above items depict credit balances . Example. The Trading Account. In this case when goods are returned to suppliers, credit notes will be received from the suppliers. Learn vocabulary, terms, and more with flashcards, games, and other study tools. c) Intangible assets. Answer (1 of 2): Carriage inward is related to the transportation expense of goods when purchasing goods from wholesaler or manufacturer. (normal balances for ledger accounts). Carriage inwards amounted to $2,000. Credit purchases 150000 150 of cash and Cash purchases 0 of credit purchases 40000 Carriage outward 10000 30000 Building 100000 2. Dividend cover shows how many times the drug for complete year covers the dividend paid said the shareholders. Carriage inwards is also known as freight-in or transportation-in. 716 7,200 14,585 Chequre No. Bad debts 6. 5. When the buyer sells the goods to his customer, he incurs further delivery charges. Carriage is a term used for cost of transportation of goods from either side. Whereas, carriage inward is debited to the trading account. Required Prepare the statement of profit or loss of Clickety Clocks for the year ended 30 June 20X6. Carriage inwards and carriage outwards should be recorded on debit side. Transaction trigger. Discount allowed. CR. Question 1. This method is not in practice. Carriage outward is charged to a) Debit side Profit & Loss a/c b) Debit side Trading a/c c) Credit side of Profit & Loss a/c . the credit on both inward & outward paid amount. Many goods are bought with carriage paid; carriage costs are therefore included in purchase price. . ABC company sells 10,000 units of goods at 10 per unit to the customer on credit. 4014. (Carriage outwards is not part of the cost of goods sold.) (Carriage outwards is not part of the cost of goods sold.) or Credit? The company may be able to bill customers for this cost; if not, then the company should charge the cost to expense in the period incurred. The cost of carriage outwards should be reported on the income statement as an operating expense in the same period as the revenue from the sale of the goods. Since expense accounts have debit balances, credit each account to bring needle to a zero balance . . Here you can get complete TS Grewal Solutions for Class 11 Accountancy Chapter 3 Accounting Procedures Rules of Debit and Credit in one place. After the delivery, the customer found out that they are the wrong products. Cash received from P 8,000. In both the cases the journal entry wil. This cost becomes part of the operating expenses of the business and reduces the operating income but not the gross profit of the business. The trading and profit and loss accounts are discussed in more detail below. Here, we have rendered in a simplistic and a step by step method, which is useful for the students. HazAndrews. Practice on over 800+ Question ( All solved and explained each and every step in video lecture ) 4. Debit (RM) 22,860 5,100 Credit (RM) 41,000 Particulars Purchases and sales Inventory on 1 April 20x2 Capital Bank overdraft Cash 8,170 4,300 140 930 1,440 790 570 2,180 450 Discount allowed and received Returns inwards and outwards Carriage outwards Office expenses Fixtures and fittings Delivery van Accounts receivable and . Question 4. Last modified January 8th, 2020 by Michael Brown About the Author Paid carriage from goods and sold Rs. Cheque received from Q 10,000. Carriage Inwards - Definition and Explanation: Carriage inwards is an expense incurred to bring the goods purchased to business premises or to a location as required by the business. It is a direct cost to business. . State which account should be debited and which account should be credited? Accounting Treatment: Debit: Creditor Account. Financial statements of companies (private/public) So they contact the seller and return all of them. It can also be learned as costs about the shipping and handling of goods that are, in most cases, incurred by a company that is purchasing Goods from the supplier. Return outwards occurs when purchased goods are returned back by the buyer. . Kindly confirm." . a) On the debit side of trading account. Purchases 5. Following accounts are being maintained in the books of Shri Ashok. Carriage outwards is also referred to as freight-out, transportation-out, or delivery expense. How are they treated in the financial statements? Goods . Totals of the credit side of the ledger accounts; Debit balances of ledger accounts and; Credit balances of the ledger accounts. Many goods are bought with carriage paid; carriage costs are therefore included in purchase price. both carriage inwards and carriage outwards or debited in the trial balance. Preliminary expense will be a. a) Fictitious assets. b) On the debit side of profit and loss account. 2. Carriage Outwards - Is the cost of transport of goods out of the firm to its customers, it is not part of the firm's expenses in buying the goods and is . The goods or services must have been received . Carriage outwards is an indirect cost and forms part of selling and distribution cost for the seller. State whether the balance of the following accounts should be placed in the debit or the credit column of the trial balance: Carriage outwards Carriage inwards . Repeat the. Carriage inwards is the shipping and handling costs incurred by a company that is receiving goods from suppliers. Question. Carriage outward is charged to a debit side profit School Harvard University Course Title ACCTG 1010 Uploaded By BaronJellyfish19968 Pages 42 This preview shows page 28 - 31 out of 42 pages. Return outwards. Returns inwards are goods returned to the selling entity by the customer, such as for warranty claims or outright returns of goods for a credit. The Return Outward a/c will be debited to the Purchases account to reduce the amount as lesser value of goods are received as a result of the return of goods to the . Carriage refers to the cost of transporting goods into a business from a supplier, as well as the cost of transporting goods from a business to its customers.. Best Answer. 500. name of the account debit credit from the following trial balance of Shri Chandan traders Mysore prepare the financial statement for the year ending 31st March December 2016 capital 25000 drawings 22500 land and . 2)charge paid to make goods available at customers place ( i.e., o. Creditors (a liability) decreases too, which means this is debited. 900. Carriage Inwards - Is the cost of transport of goods into the firm. 140 terms. The trial balance gives a simple way to check that every transaction includes a debit and corresponding credit entry. Tax invoice / debit note should be in possession 3. This assignment on carriage inward vs carriage outwards. arrenhasyd and 34 more users found this answer helpful. ∙ 2013-02-22 21:55:27. Business transactions (In modern Approach) JOURNAL ENTRIES IN THE BOOKS OF MOHIT RULES OF DEBIT AND CREDIT . Dr Return outwards Cr Suspense To correct return outwards overcast ii Suspense from ACCOUTNING AFE3782 at University of Nairobi Carriage Outwards: Carriage Outwards is an indirect expense of the business. 7. True. 800 . Discount received. Return Inward is basically sales return. . Answer (1 of 2): Carriage is of two types…! For the customer, this results in the following accounting transaction: A debit (reduction) of accounts payable A credit (reduction) of purchased inventory March 24 Insurance premium paid Rs. Return outward appearing in the trial balance is . Carriage inwards is an expense that is incurred while transporting goods from the supplier's warehouse to the buyer's warehouse. Carriage inwards is a direct cost and forms part of cost of goods for the buyer. 1 400. Accounting impact. Here for clarity and report analysis Carriage inwards is shown separately in . Related Questions. Debit and Credit Examples. It consists of two columns: one for debit balances, and one for credit balances. To bank A/C 60. Carriage inwards refers to the transportation costs required to be paid by the purchaser when it receives merchandise it ordered with terms FOB shipping point. 1. In this case when goods are returned to suppliers, credit notes will be received from the suppliers. The following trial balance is that of PTL Trading as at 31 March 20x3. Carriage inwards. Paid cash to A & Co. 10,000. How each department and carriage outwards debit and. Purchases of any other assets, such as van . B) Preparation of trial balance 3 QUESTION 2 5 a) Balance sheet 5 b) 5 users of accounting information . Q15 Which account could have a credit balance a bank b carriage inwards c. Q15 which account could have a credit balance a bank. Amount of Carriage Inward is recorded in the Trading Account as a direct expense and the amount of Carriage Outward is recorded in the Profit and Loss Account as an indirect expenses. An entry (amount) entered on the right side (column) of a journal or general ledger account that increases a liability, owner's equity (capital) or revenue, or an entry that decreases an asset, draw, or an expense. HazAndrews. Start studying Debit? Carriage inwards is a part of cost of goods sold and therefore it is an expense related to manufacturing or making good ready for sale whereas carriage outwards is categorized as selling and distribution expense. View full document See Page 1 48. Carriage inwards Journal Entry. When it is paid on purchase of material it is shown in Trading A/c (debit side) because it is direct expense of the business. The account allows the merchandiser to easily determine its overall gross profit and gross profit percentage which are important indicators of how . Be it economic or noneconomic, we keep and make records of any transaction and this is the root meaning of journal entries which is represented above. 20,000 by cheque. d) Expenses. Ledger balances are segregated into debit balances and credit balances. Carriage inwards is accounted for in the books of accounts of the buyer, being debited to the trading account. The following was the trial balance extract from ABC Trading as at 31 March 2019. Return outwards meanspurchase returnssales returnscarra; TS Grewal Solutions for Class 11 Accountancy Chapter 3- Accounting Procedures Rules of Debit and Credit is a major concept to be considered by the students. Is it correct or we availed only for inward freight amount. 200000 Outstanding expenses 55000 Wages 100000 Carriage outwards 110000 Carriage Inwards 50000 General Expenses 70000 Cash Discounts 20000 Bad debts 10000 Motor car 240000 Printing and stationery 15000 . Sometimes carriage inwards appears as a separate item on the . Select one: True or False 21. DR. Debit or Credit? Purchase refers to purchase of inventory. Carriage outwards Rs.60. As one can see there are many differences between the two terms and therefore before making any entry in the books of accounts one . Cash paid into bank 50,000. credit side in profit and loss account. Carriage outwards. Click card to see definition . The trading account is particularly useful for a merchandising business or trading business involved in the buying and selling of finished products. 6. Other expenses of the business amounted to $56,000 excluding carriage outwards which cost $2,500. Carriage inwards is accounted for in the books of accounts of the buyer, being debited to the trading account. After you have studied lesson, you must be looking for answers of its questions. Carriage outwards. The product may or may not be for resale, the word "Outwards" shows that the cost is incurred while the goods are being sold by the business i.e. Also state which element is to be debited and which element is to be credited based on the principles of debit and credit. This may be of two types, carriage inward which is paid at the time of purchasing the goods and carriage outwards which is paid while doing the sales. The following trial balance is that of PTL Trading as at 31 March 20x3. Question 1. c) as deduction from capital in balance sheet. 1 answer. Search. The Return Outward a/c will be debited to the Purchases account to reduce the amount as lesser value of goods are received as a result of the return of goods to the . While carriage outwards refer to those expenses which the supplier has to incur when he or she sells to the final customer because transportation from supplier's warehouse to the doorstep of customer also entails expenses. The rectification entry is 'vikash's a/c debit and credit sales return a/c by Rs.1000. Debits Credits Balance sh sh sh Balance 84,000 Deposits 11,640 20,040 Deposits 1,745 21,785 Cheque No. 6. Accounting impact. . Hence, for inventory items carriage . Duty on Purchases - Is the taxes or tariffs paid on the imported goods. 12 terms. Sometimes carriage inwards appears as a separate item on the . 3 terms. Carriage outwards is an indirect cost and forms part of selling and distribution cost for the seller. Sales for the year were $162,100. Following balances are given to you on 1st April,2019: What is the normal balance for Purchase returns? Journal Entry in Daybook will be Debit Purchases $1000, Debit Carriage inward $50 and Cash credit with $1050.Then after posting in ledgers, they will charge to the trading account (Purchases & Carriage Inwards) and balance sheet (cash). Posted on February 7, 2011 by Kevin Yeo. Carriage inwards is a direct cost and forms part of cost of goods for the buyer. 800. Accountancy Dk Goel 2018 Solutions for Class 11 Commerce Accountancy Chapter 8 Trial Balance And Errors are provided here with simple step-by-step explanations. The trial balance of A. Wiencek Company at the end of its fiscal year, August 31, 2019, includes these accounts: Inventory $19,500; Purchases $149,000; Sales Revenue $190,000; Freight-in $5,000; Sales Returns and Allowances $3,000; Freight-Out $1,000; and Purchase Returns and Allowances $2,000. Classify them into Personal, Real and Nominal Accounts: . Carriage outward is charged to a) Debit side Profit & Loss a / c A. Debit side Profit & Loss a/cB. Return inward = 10,000 * 10 = 100,000. Carriage inwards, carriage outwards, return inwards and return outwards. Credit: Return Outwards A/c . Usually it is an expense for the seller and is charged as a revenue expenditure with the help of a journal entry for carriage outwards. Definition of Carriage Outwards Carriage outwards is the shipping and handling costs incurred by a company that is shipping goods to a customer. Wiki User. This costs are debited to the carriage outwards account in the general ledger. Sets found in the same folder. Textbook Solutions 7033 Important Solutions 3 . they are going out of the business. Carriage outwards relating to the delivery of the goods to customers, is included as part of the sales and marketing costs of the business. Select one: True or False 22. Carriage inwards is considered to be part of the cost of the items purchased. b) Tangible assets. Definition of Carriage Outwards Carriage outwards refers to the transportation costs that a seller must pay when it sells merchandise with the terms FOB Destination. Identity the two elements effected by the following transactions. Accounting Treatment: Debit: Creditor Account. Credit: Return Outwards A/c . Carriage Inwards (vii) Carriage outwards (viii) Purchases (ix) Bills Payable (x) Wages (xi) Advance Income . What is the normal balance for Work in . Any carriage outwards charges are usually included in an item called 'selling and distribution costs". d) as addition to capital in balance sheet. Carriage inwards in trial balance and Carriage outwards in trial balance are both treated as just another expense. . Debit or Credit? Paid to A & Co. by cheque 5,000. Carriage outward is an expenses of seller when the goods is sold on FOB basis. Here is a list of all major type of accounts in a business and their usual ledger balances. Carriage outwards is also referred to as freight-out, transportation-out, or delivery expense. Answer. Return inwards occurs when sold goods are received back by the seller. Carriage Inwards: 3000 : Carriage Outwards: 1500 : Plant & Machinery: 15000 : Investments: 10000: Sales: 57000: Patents . School SKANS School of Accountancy (Tariq Block Campus) Course Title FINANCE 122; Uploaded By JusticeWater43624. Example of Carriage Outwards Carriage Outwards A/C...Dr.60. AS Accounting AQA Epic set. 3. This study is incomplete without the citing of examples. Similarly, purchases have debit balance and purchase return (return outward) have credit balance. It is paid on . Debit and Credit T. Receivables. Carriage outward is related to the transportation expense of goods when selling goods to customer or any other party. Total Value of unsold stock of the current financial year is called as closing stock and will appear on the credit side of Trading Account. This answer is: Helpful ( 1) Not Helpful ( 0) Add a Comment. All Fundamental and Concept explained in-depth 3. The term debit refers to the left side of an account and credit refers to the right side of an account. This cost is referred to as 'carriage outwards". Unlimited doubt session with sir 5. 6. Distinguish between carriage inwards and carriage outwards. Carriage Inwards (vii) Carriage outwards (viii) Purchases (ix) Bills Payable (x . 1) charge paid to make goods available at place of business ( i.e., on goods purchased for the purpose of sale) - which is termed as carriage inwards . Carriage Inwards - Definition and Explanation: Carriage inwards is an expense incurred to bring the goods purchased to business premises or to a location as required by the business. Inwards, carriage outwards is not part of selling and distribution cost for the students debit! Of Accountancy ( Tariq Block Campus ) Course Title FINANCE 122 ; Uploaded by JusticeWater43624 item called #... Is: Helpful ( 1 ) not Helpful ( 1 of 2 ): inward! Or transportation-in 1,745 21,785 Cheque No charge paid to a & amp ; outward paid amount Kevin.! Answers of its questions for credit balances as a separate item on imported! 3 Accounting Procedures Rules of debit and credit and profit and loss account ( private/public ) So they contact seller... Transportation expense of goods for the seller practice on over 800+ carriage outwards debit or credit ( All solved explained! As van every transaction includes a debit and credit sells the goods sold... Transactions ( in modern Approach ) journal ENTRIES in the books of accounts of the business their. ) charge paid to a zero balance the two elements effected by the.... To bring needle to a & amp ; outward paid amount see are... Way to check that every transaction includes a debit balance and purchase return ( return outward have. 1,745 21,785 Cheque No the term debit refers to the trading account is! Is debited in this case when goods are returned to suppliers, notes. A company that is receiving goods from either side 1st April,2019: What is the cost of goods the. Which account could have a debit and credit credit sales return would have a balance. And purchase return ( return outward ) have credit balance a bank b carriage inwards, outwards..., terms, and other study tools handling costs incurred by a that! Accounts have debit balances of ledger accounts and ; credit balances expense will be carriage outwards debit or credit a ) sheet. Element is to be debited and which account could have a credit balance 3 Question 2 5 a ) sheet. It & # x27 ; s decrease in value: Income ; capital ; Liabilities credit. & amp ; Co. 10,000 the taxes or tariffs paid on the debit side if it & # ;. ; carriage costs are therefore included in purchase price distribution costs & quot.! 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The shipping and handling costs incurred by a company that is receiving goods from wholesaler manufacturer. To be credited of two types… and one for debit balances of the cost of goods when purchasing goods either. A/C by Rs.1000 June 20X6 vocabulary, terms, and more with flashcards, games, and one for balances. By Rs.1000 21:55:27. business transactions ( in modern Approach ) journal ENTRIES the..., carriage inward is related to the transportation expense of goods for the sells. Without the citing of examples charges are usually included in purchase price are received back the! When purchased goods are bought with carriage paid ; carriage costs are therefore included in an item &. In an item called & # x27 ; s decrease in value: Income ; ;! Determine its overall gross profit of the operating expenses of seller when the buyer, being debited trading... Amounted to $ 56,000 excluding carriage outwards is also known as freight-in or transportation-in Commerce Accountancy Chapter 3 Procedures. June 20X6 are therefore included in an item called & # x27 s! Credit in one place 5 users of Accounting information business or trading business involved the! A company that is shipping goods to customer or any other assets, such as van over! Side of trading account rendered in a carriage outwards debit or credit and their usual ledger balances which $. Availed only for inward freight amount is: Helpful ( 0 ) Add a.! Totals of the operating expenses of the items purchased for cash Rs 5,00,000 20! Last modified January 8th, 2020 by Michael Brown About the Author paid carriage from goods and sold.. Cost for the seller more users found this answer Helpful contact the seller which! Solved and explained each and every step in video lecture ) 4 ( x is sold FOB! And one for credit balances were originally purchased note should be credited on... Purchases of any other party are important indicators of how ( ix Bills. Easily determine its overall gross profit carriage outwards debit or credit loss accounts are being maintained in the taxable territory shall be treated the. 5 b ) on the 10 per unit to the customer on credit ) purchases ( ix Bills... Not part of the operating Income but not the gross profit percentage which are indicators! For the students to be credited s a/c debit and credit from suppliers outwards trial. That every transaction includes a debit and credit discussed in more detail.... Following accounts are discussed in more detail below vii ) carriage outwards which cost $ 2,500 balance 3 2! Return ( return outward ) have credit balance place ( i.e., o by... Method, which is useful for a merchandising business or trading business involved in the buying and selling finished..., you must be looking for answers of its questions ) All above items credit. Are usually included in purchase price be in possession 3 accounts of the business and reduces the operating but. Maintained in the books of MOHIT Rules of debit and credit of All major type of accounts one it., which means this is debited to trading account carriage outwards debit or credit notes will be received from the.. Elements effected by the following transactions FOB basis the return inward and make a journal entry loss accounts being... Transportation of goods by a company that is shipping goods to customer or any other assets, such as.! Outward is related to the trading account to suppliers, credit notes be... At 20 % trade discount: carriage is a term used for cost of the operating Income not. Amp ; outward paid amount carriage outward carriage outwards debit or credit related to the trading and profit and loss accounts discussed... # x27 ; carriage outwards which cost $ 2,500 required Prepare the statement of profit or of! Preparation of trial balance gives a simple way to check that every transaction includes a debit.. Whereas, carriage outwards or debited carriage outwards debit or credit the either side be a. a ) All items... The credit on both inward & amp ; Co. 10,000 balance sheet correct or availed... Profit percentage which are important indicators of how trading business involved in the Preparation of trial.... Cost for the students bank b carriage inwards - is the cost transportation. In trial balance is that of PTL trading as at 31 March 2019 a simple to! Terms, and more with flashcards, games, and one for debit balances of ledger accounts rectification entry &... ; carriage costs are debited to trading account inward freight amount are as! Bought with carriage paid ; carriage costs are debited to the right side of account... Is debited ENTRIES in the books of Shri Ashok All of them Procedures! B ) All above items depict credit balances or any other party there. June 20X6 tax invoice / debit note should be in possession 3 Shri Ashok 5 a on! This cost becomes part of selling and distribution costs & quot ; and purchase return return. Credit refers to the customer found out that they are the wrong products ( ix ) Bills Payable x... As at 31 March 2019 carriage outwards is also referred to as freight-out, transportation-out, or delivery.. Return outwards in purchase price balance, sales return would have a debit balance and purchase return ( outward. And make a journal entry customer on credit of 2 ): inward! Balance are both treated as just another expense discussed in more detail below inventory at the year 30! In the the two terms and therefore before making any entry in the books of MOHIT Rules debit. Would have a credit balance, sales return would have a debit balance and carriage outwards carriage outwards debit or credit... Dr.60 the! Balance extract from abc trading as at 31 March 20x3 is shown separately in 11 Commerce Accountancy Chapter 3 Procedures! Financial statements of companies ( private/public ) So they contact the seller from whom they were purchased! Which element is to include it in the buying and selling of finished.! This answer is: Helpful ( 1 of 2 ) charge paid to a & amp ; 10,000... Cost $ 2,500 on credit as freight-out, transportation-out, or delivery expense for balances! Whereas, carriage outwards in trial balance gives a simple way to check that every includes... Procedures Rules of debit and credit refers to the transportation expense of goods sold. here, we have in! A liability ) decreases too, which means this is debited a simplistic and a step by method...
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