Consignment: Practical & Theoretical Questions with Answers
Comprehensive Explanation with Examples
Practical Questions
1. Amit Traders (Q10)
2. Virat & Anushka (Q45)
3. X of Ahmedabad (Q49)
4. Bharat Vision Co. (Q14)
5. Alpesh of Ahmedabad (Q21)
6. Akshar of Ahmedabad (Q37)
7. Virus Corp. (Q52)
8. Sonpal of Sakheda (Q4)
9. Mehsana Chemical (Q44)
10. Rameshwari of Rajkot (Q53)
Theoretical Questions
1. What is consignment? Purpose of selling through consignment?
2. How to calculate closing stock in consignment?
3. What is an Account Sale? What information does it provide?
4. Difference between consignment & sales.
5. Give a specimen of consignment with figures.
6. Discuss different types of commission.
1. What is Consignment?
ess arrangement where goods are sent by a consignor to a consignee, who sells them on behalf of the consignor.
ment:**
nce without opening new branches.
onsignee, as unsold goods can be returned.
ory management for the consignor.
emains with the consignor.
mission based on sales.
ks until goods are sold.
2. How to Calculate Closing Stock?
consignment refers to unsold goods that remain with the consignee at the end of the accounting period.
(Remaining Goods × Cost Price) + Proportionate Expenses
ulate Closing Stock:**
otal goods sent on consignment.
uantity sold by the consignee.
value of remaining stock at cost price.
onate direct expenses incurred on the consignment.
ulation:**
50,000
40,000
es: ₹5,000
ck: ₹10,000
Value = ₹10,000 + Proportionate Expenses
3. What is an Account Sale?
is a statement sent by the consignee to the consignor summarizing sales and expenses.
cluded in an Account Sale:**
Value of Goods Sold:** Details of goods sold by the consignee.
curred:** Any expenses (such as freight, insurance, etc.) paid by the consignee on behalf of the consignor.
n Charged:** Consignee’s commission on sales, either as a fixed percentage or del credere commission.
able to Consignor:** Net proceeds after deducting expenses and commission.
gnor informed about sales performance.
e recognition and accounting.
arency between consignor and consignee.
4. Difference Between Consignment & Sales
spect** | **Consignment** | **Sales** |
-------------|----------------------------------------------|------------------------------------------|
nership | Remains with consignor until sold. | Immediately transfers to buyer. |
| Consignor bears risk until goods are sold. | Buyer assumes risk after purchase. |
enue Recognition | Only when consignee sells the goods. | At the time of sale. |
urn Policy | Unsold goods can be returned to consignor. | No return unless specified. |
mmission | Consignee earns a commission on sales. | No commission involved. |
mple:**
anufacturer sending goods to a retailer on consignment vs. a direct sale to a customer.
5. Specimen of Consignment
**Example: ABC Ltd. sends goods to XYZ Traders.**
**Transactions:**
1. Goods Sent on Consignment - ₹50,000
2. Freight & Packaging Expenses - ₹2,000
3. Sales Recorded by Consignee - ₹40,000
4. Commission (10%) - ₹4,000
5. Net Profit - ₹34,000
6. Unsold Stock - ₹10,000
**Journal Entries in Consignor's Books:**
- Debit: Consignment A/c ₹50,000
- Credit: Goods Sent A/c ₹50,000
- Debit: Bank A/c ₹40,000
- Credit: Consignment A/c ₹40,000
6. Types of Commission in Consignment
mmission based on their role and responsibility in the sales process. The main types of commission are:
mission:** A fixed percentage of total sales revenue, given to the consignee for handling sales.
are ₹1,00,000 and commission is 5%, the consignee gets ₹5,000.
mmission:** Additional commission given for bearing the risk of bad debts (credit sales).
mission is 3% and credit sales total ₹50,000, the consignee receives ₹1,500 but is responsible for unpaid debts.
mmission:** Extra commission for achieving specific sales targets or managing difficult sales regions.
signee sells beyond ₹1,00,000, they receive an additional 2% commission.
ssion:** A negotiated commission granted for special services like marketing or storage.
mmission:**
ignee to sell more.
nee to take on additional responsibilities.
e consignor by incentivizing credit sales through del credere commission.
