Tuesday 19 July 2011

Consignment Account


Consignment                                                Chapter No 3

What is consignment?
Consignment is a act of sending a quantity of good from one person/one country to another person/an other country for selling purpose is called consignment.
Who is consignor?
Consignor is person who is sending the goods means sender of goods is called consignor.
Who is consignee?
Consignee is person to whom goods are send is called consignee
What is consignment outward?
Dispatch of goods for consignor to consignee is called consignment outward
What is consignment inward?
Goods receipts  from consignee for consignee point of view is called consignment inward
What is difference between sale and consignment?
Sales
Consignment
Ownership is transferred to purchaser
Ownership is not transfer to consignee
Relationship between seller and purchaser of debtor and creditors
Relationship between consignor and consignee of Principle and agent
All the expenses are borne  by Purchaser
All the expense are borne by consignor
Purchaser is responsible for all losses
Consignor is responsible for all losses
Account sale is not required
All sale is required

Define the term commission?
Remuneration paid for services is called commission. Commission is always paid on sales.
Define the term Del creder commission?
Extra commission paid to consignee for timely collection of debs and avoids bad bebts is called Del creder commission.
What is overriding commission?
Commission paid on the sale of new product line is called overriding commission
Define advance against consignment?
Advance given by consignee to consignor that may be in form of cash or bill of exchange
What is consignment account?
Consignment account which shows profit or loss is called congisments account.
What is an account sale?
A document prepared by consignee by giving the detail of goods sold
Define Performa invoice?
An invoice which give the detail about the quantity, quality of goods
What is Normal loss?
Which is inherited and cannot not avoid like the sand
What is abnormal loss?
Which is not inherited and can be avoided is called abnormal loss.
What is stock?
No of finished goods remain unsold is called unsold stock

ENTRIES FOR CONSIGNMENT


Consignor’s Journal
Consignee’s journal
1.When Goods sent for consignment

Consignment account
No entry because of no transfer of ownership
                    Goods sent for Consignment
2.Expenses incurred by Consignor

Consignment account
No entry because these are incurred by consignor
              Bank account
3.Advance against Consignment

Cash account
Consignor account
         Consignee account
              Cash account
4.Expenses incurred by Consignee

Consignment account
Consignor accent
                Consignee account
               Cash account
5.sales of goods

Consignee account
Cash account
          Consignment account
           Consignor account
6.Commission paid by consignor

Consignment account
Consignor account
                  Consignee account
              Commission account
Be careful. And remember.
Here stop and make consignment account from journal of consignor. And get profit or loss Proceed if profit then profit and loss is credited and if loss then profit and loss is debited.
7.For profit

Consignment account
 No entry because he has no concern with profit
            Profit and loss account
8.Clsoing of consignment

Good sent for consignment account
 No entry because he has no concern with profit
                        Trading account

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