This document provides a quick revision of key concepts in consignment accounting. It outlines that in a consignment, the consignor remains the owner of goods sent to the consignee. The consignee sells the goods on behalf of the consignor and is entitled to commission. Important accounts include goods sent on consignment, consignment to (consignee name), and stock on consignment. Key accounting entries are described for transactions such as goods sent on consignment, sales made by the consignee, expenses incurred by both parties, and transferring the unsold goods or profit back to the consignor.

1. Chartered Accountancy Session 1, Section A
CPT Course Fundamentals of Accounting
Lecture 12 – Consignment Accounting Quick Revision Notes
1 Points to be kept in mind 3 Important Concept
 Consignor remains the owner of goods even after sending to consignee. 1. Valuation of Stock: Stock should be valued at cost or net realizable value whichever is
 Consignor does not send any Invoice rather a Performa invoice. lower. In case of consignment, cost means:
 The Amount of Sales belongs to Consignor. Cost of Goods to Consignor
 All the exp. are to be borne by Consignor. If borne by consignee, recoverable + Exp. incurred till the goods reach the premises of the consignee
from consignor. 2. Goods invoiced above cost: If goods are booked at higher than cost, the effect of
 Consignee entitled to Commission. loading must be removed by additional entries.
 Consignee entitled to de-credere commission if he is responsible for bad debts. Additional Entries:
 Consignee sends a statement called Account Sales, periodically. 1. Goods sent on Consignment A/c Dr.
To Consignment to ____ A/c
2 Important Terns & Concepts (reversing loading in goods sent on consignment)
2. Consignment to _____ A/c Dr.
Transaction Accounting Entry To Stock Reserve A/c
Goods sent on consignment Consignment to ___ A/c Dr. (reversing loading in value of closing stock)
To Goods sent on consignment A/c 3. Abnormal Loss: 1. Find out the cost of the goods lost
Exp. Incurred by Consignor Consignment to ___ A/c Dr. 2. Pass the entry: P. & L. A/c Dr.
To Cash/Bank A/c To Consignment to ______ A/c
Exp. Incurred by Consignee Consignment to ___ A/c Dr. 4. Normal Loss: Spread over the entire consignment
To Consignee Cost per unit = Total Cost + Expenses incurred / Qty available after normal loss
For Sale done by Consignee Consignee Dr. 5. Return of Goods from the consignee: Goods valued at the price at which it was
To Consignment to ___ A/c consigned to consignee
Commission due to Consignment to ___ A/c Dr. Exp. incurred by the consignee to send those goods back to consignor are not taken into
Consignee To Consignee consideration.
Amount received from Cash/Bank A/c Dr.
Consignee To Consignee
For unsold goods on Stock on Consignment A/c Dr. Accounting Entries – In the books of consignee
4
consignment To Consignment to ___ A/c
Transferring profit on Consignment to ___ A/c Dr. Ignore: 1. Entries for Goods sent on Consignment; 2. Exp. incurred
consignment To P. & L. A/c by Consignor.
Transferring goods sent on Goods sent on consignment A/c Dr.
consignment to Trading A/c To Trading Account Record: 1. Entries for advance sent by consignee to consignor; 2.
Entries for making sales; 3. Exp. incurred by Consignee; 4. Earning
Commission.
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