2nd year accounting Notes for I.Com Part II Consignment Chapter 3

Chapter no 3                                         Consignment page contain complete set od definition please read carefully

1.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.

7.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

8.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 debts 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 consignments account. What is an account sale? A document prepared by consignee by giving the detail of goods sold Define Performa invoice? An invoice which gives 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 

15.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