13 + Interview Questions in CONSIGNMENT ACCOUNTS IN GENERAL AWARENESS Page 1 InterviewSolution

1.	The consignor is the ................
Answer» The consignor is a principal. In consignment goods are sent to be kept and sold on behalf of and at the risk of sender by the recipient. The person who forwards the goods for sale is the consignor or 'Principal' and the person to whom the goods are forwarded is consignee or 'Agent'.

1.

The consignor is the ................

Answer»

The consignor is a principal.

In consignment goods are sent to be kept and sold on behalf of and at the risk of sender by the recipient. The person who forwards the goods for sale is the consignor or 'Principal' and the person to whom the goods are forwarded is consignee or 'Agent'.

Discussion

2.

Give two differences between invoice and proforma invoice?

Answer»

Base of Difference	Invoice	Proforma Invoice
Transfer of ownership	Here ownership of goods is transferred to purchaser.	Here ownership of goods is not transferred from consignor to consignee.
Statement of Goods	This is a statement letter of sold goods to purchaser by seller.	This is a statement letter of goods sent by consignor to consignee.

Discussion

3.

What are the difference between invoice and proforma invoice?

Answer»

S.No.	Difference Basis	Proforma Invoice	Invoice
1.	Instructions and Condition	Here instruction and conditions are related to the selling of goods.	While in invoice instruction and conditions are related to the purchasing of goods.
2.	Base	It send to its representative by consignor.	While it sent to its buyer by seller.
3.	Statement	It is a statement of goods sent to consignee by consignor.	While it is statement of goods remaining to buyer by consignee.
4.	Transfer of Ownership	By this statement ownership is not transferred to consignee from consignor.	While in Invoice ownership of goods is transferred to buyer.

Discussion

4.	An agent is entitled to get delcredere commission, what entry he will pass, if bad debts due to credit sales occurs?
Answer» Cash A/c Dr. (Received of debtors) Commission A/c Dr. (Bad debts) To Consignment Debtors A/c (Being bad debts written off from commission a/c)

Discussion

5.	What is the difference between delcredere commission and additional commission?
Answer» Delcredere Commission: To increase the sale and encourage the consignee to make credit sales, consignor provide an additional commission called delcredere commission. Overriding Commission : It is an extra commission allowed by consignor to consignee to promote sales at higher price than invoice price.

Discussion

6.

Vivek paid to Bhavesh 5% general commission on sales and 2.5% delcredere commission. Bhavesh sold goods worth Rs 60,000 including Rs 40,000 on credit sales. What amount of commission Bhavesh will received?

Answer»

5% General Commission on Sale(60,000 x 5%)	Rs.3,000
2.5 Delcredere Commission on Credit Sale (40,000 x 2.5%)	Rs.1,000
	Rs.4,0000

Discussion

7.	What is the nature of consignment account?(a) Real account(b) Personal account(c) Nominal account(d) Agent account
Answer» (c) Consignor and consignee

Discussion

8.	What do you mean by consignment? Explain with example about various types of commission given to consignee.
Answer» Meaning of Consignment: When the owner of goods or principle sends goods to his agent on this basis that goods will be sold by the agent and he will be entitled to get commission as remuneration at a certain rate on sale of goods. This procedure is known as consignment, ownership of goods remains with the consignor. Therefore, he enjoys the whole amount of profit and bears all risks, expenses and losses regarding consignment. Commission : Commission is the remuneration paid by the consignor to the consignee for the services rendered to the former for selling the consigned goods. Three types of commission can be provided by the consignor to the consignee, as per the agreement, either simultaneously or in isolation. They are: (i) Ordinary Commission : The term commission simply denotes ordinary commission. It is based on fixed percentage of the gross sales proceeds made by the consignee. It is given by the consignor regardless of whether the consignee is making credit sales or not. This type of commission does not give any protection to the consignor from bad debts and is provided on total sales. (ii) Delcredere Commission: To increase the sale and to encourage the consignee to make credit sales, the consignor provides an additional commission generally known as delcredere Commission. This additional commission when provided to the consignee gives a protection to the consignor against bad debts. In other words, after providing the delcredere commission bad debts is no more the loss of the consignor. It is calculated on total sales unless there is any agreement between the consignor and the consignee to provide it on credit sales only. (iii) Overriding Commission: It is an extra commission allowed by the consignor to the consignee to promote sales at higher price than specified or to encourage the consignee to put hard work in introducing new product in the market. Depending on the agreement it is calculated on total sales or on the difference between actual sales and sales at invoice price or any specified price.

8.

What do you mean by consignment? Explain with example about various types of commission given to consignee.

Answer»

Meaning of Consignment: When the owner of goods or principle sends goods to his agent on this basis that goods will be sold by the agent and he will be entitled to get commission as remuneration at a certain rate on sale of goods. This procedure is known as consignment, ownership of goods remains with the consignor. Therefore, he enjoys the whole amount of profit and bears all risks, expenses and losses regarding consignment.

Commission : Commission is the remuneration paid by the consignor to the consignee for the services rendered to the former for selling the consigned goods. Three types of commission can be provided by the consignor to the consignee, as per the agreement, either simultaneously or in isolation.

They are:

(i) Ordinary Commission : The term commission simply denotes ordinary commission. It is based on fixed percentage of the gross sales proceeds made by the consignee. It is given by the consignor regardless of whether the consignee is making credit sales or not. This type of commission does not give any protection to the consignor from bad debts and is provided on total sales.

(ii) Delcredere Commission: To increase the sale and to encourage the consignee to make credit sales, the consignor provides an additional commission generally known as delcredere Commission. This additional commission when provided to the consignee gives a protection to the consignor against bad debts. In other words, after providing the delcredere commission bad debts is no more the loss of the consignor. It is calculated on total sales unless there is any agreement between the consignor and the consignee to provide it on credit sales only.

(iii) Overriding Commission: It is an extra commission allowed by the consignor to the consignee to promote sales at higher price than specified or to encourage the consignee to put hard work in introducing new product in the market. Depending on the agreement it is calculated on total sales or on the difference between actual sales and sales at invoice price or any specified price.

Discussion

9.	If consignee is not entitled for delcredere commission and Rs 1,500 due to debtors become bad-debts, what entry will be passed in the books of consignor for such bad-debts?
Answer» Consignment A/c Dr. 1,500 To Consignee A/c 1,500

Discussion

10.

What are the difference between consignment and sales?

Answer»

Difference between Consignment and Sale

Difference Basis	Consignment	Sale
Relation between two parties	Relation between two parties is that of consignor and consignee.	Relation of seller and buyer. Relation of creditor-debtor in case of credit sale.
Transfer of goods ownership	Ownership of goods remains with the consignor even if the goods sent by consignor to consignee.	Ownership of goods is transferred to the buyer with the sale of goods
Risk of goods	Risk of goods always remains with the consignor.	Risk of goods is also transferred to the buyer with the transfer of goods to the buyer.
Earnings	Consignee receives commission on sale of goods and consignor earns profit.	Seller earns profit on sale of goods.
Sending statement	Proforma invoice is sent on consignment of goods.	Invoice is given on sale of goods.

Discussion

11.	The statement of account which is sent by the consignee after selling goods is known as :(a) Invoice(b) Statement of Sale(c) Account of Sale(d) Performa Invoice
Answer» (b) Statement of Sale

Discussion

12.	B/R received from consignee Rs 10,000 consignor discounted it from bank for Rs 9,600. What will be passed for discounting the bill?(a) Bank A/c Dr. 9,600Discount A/c Dr. 400To B/R A/c 10,000(b) Bank A/c Dr. 9,600To Consignment A/c 400To B/R A/c 10,000(c) Bank A/c Dr. 9,600Consignment A/c Dr. 400To B/R A/c 10,000(d) Bank A/c Dr. 9,600Discount A/c Dr. 400To Consignment A/c 10,000
Answer» (c) Bank A/c Dr. 9,600 Consignment A/c Dr. 400 To B/R A/c 10,000

Discussion

13.	Consignor sent goods on consignee to consignment, consignor paid 5% commission on invoice price and 20% above on invoice price. Consignor sent goods worth Rs 80,000 at a invoice price of Rs 1,00,000, which is sold in Rs 1,10,000. The amount of commission for agent: (a)Rs 7,000 (b)Rs 8,000 (c)Rs 10,000 (d)Rs 5,800
Answer» (a) Rs 7,000

Discussion

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The consignor is the ................

Give two differences between invoice and proforma invoice?

What are the difference between invoice and proforma invoice?

An agent is entitled to get delcredere commission, what entry he will pass, if bad debts due to credit sales occurs?

What is the difference between delcredere commission and additional commission?

Vivek paid to Bhavesh 5% general commission on sales and 2.5% delcredere commission. Bhavesh sold goods worth Rs 60,000 including Rs 40,000 on credit sales. What amount of commission Bhavesh will received?

What is the nature of consignment account?(a) Real account(b) Personal account(c) Nominal account(d) Agent account

What do you mean by consignment? Explain with example about various types of commission given to consignee.

If consignee is not entitled for delcredere commission and Rs 1,500 due to debtors become bad-debts, what entry will be passed in the books of consignor for such bad-debts?

What are the difference between consignment and sales?

The statement of account which is sent by the consignee after selling goods is known as :(a) Invoice(b) Statement of Sale(c) Account of Sale(d) Performa Invoice