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2nd Year Accounting Notes

This document discusses key concepts related to consignment accounting. It defines consignment as sending goods from one person or country to another for selling purposes. A consignor is the sender of goods, while a consignee is the recipient. Consignment outward refers to dispatching goods from the consignor to the consignee, while consignment inward is goods received by the consignee. The key difference between a sale and consignment is that ownership is not transferred under consignment. The document also defines commission, del credere commission, overriding commission, and advance against consignment. It provides the journal entries related to consignment transactions from the perspective of the consignor and consignee.

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1K views4 pages

2nd Year Accounting Notes

This document discusses key concepts related to consignment accounting. It defines consignment as sending goods from one person or country to another for selling purposes. A consignor is the sender of goods, while a consignee is the recipient. Consignment outward refers to dispatching goods from the consignor to the consignee, while consignment inward is goods received by the consignee. The key difference between a sale and consignment is that ownership is not transferred under consignment. The document also defines commission, del credere commission, overriding commission, and advance against consignment. It provides the journal entries related to consignment transactions from the perspective of the consignor and consignee.

Uploaded by

MumtazAhmad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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2nd Year Accounting

Notes
Tuesday, 19 July 2011

Consignment Account
Consignment
No 3

Chapter

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
Ownership is transferred to purchaser
Relationship between seller and purchaser of
debtor and creditors
All the expenses are borne by Purchaser
Purchaser is responsible for all losses
Account sale is not required

Consignment
Ownership is not transfer to consignee
Relationship between consignor and consignee
of Principle and agent
All the expense are borne by consignor
Consignor is responsible for all losses
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


Consignors Journal

Consignees 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

Posted by Notes and Tutorials of Accounting at 22:31


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6 comments:
1.
manoveli1 February 2014 at 08:58
Nice Job. Thank you very much.
Reply
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