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VALUATION of unsold stock will be done LIKE a closing stock of a Trading concern and should be valued at the cost or the MARKET price whichever is low.

This stock will be valued at:

• Proportionate cost price and
• Proportionate direct expenses.

Here, proportionate direct expenses mean — all expenses INCURRED by the consignor and the expenses of CONSIGNEE, which are incurred by him till the goods reach the warehouse.

Valuation of unsold stock will be done like a closing stock of a Trading concern and should be valued at the cost or the market price whichever is low.

This stock will be valued at:

Here, proportionate direct expenses mean — all expenses incurred by the consignor and the expenses of consignee, which are incurred by him till the goods reach the warehouse.

Following are the reasons that explain why CONSIGNMENT is not a sale:−

• Ownership: Ownership of GOODS need to be transferred from seller to buyer in case of sale, but ownership of goods remains with the consignor, till the goods are sold by the consignee.
• Risk: In case of a consignment, normally, risk remains with the consignor in the event of goods being lost or destroyed.
• Relationship: The RELATION between a seller and a buyer will be of debtor and creditor in case where goods are sold on credit basis. On the other hand, the relationship between a consignor and a consignee is that of PRINCIPAL and agent.
• Goods Return: Usually, the sold goods cannot be returned back; however, if there is any manufacturing defect or any other technical FAULT, seller is obliged to take them back. On the other hand, consignee may return the unsold stock of goods to consignor anytime.

Following are the reasons that explain why consignment is not a sale:−

The value of abnormal gain is transferred to the debit side of the relevant process and ULTIMATELY CLOSED by crediting it to the COSTING PROFIT and Loss ACCOUNT.

The value of abnormal gain is transferred to the debit side of the relevant process and ultimately closed by crediting it to the costing Profit and Loss account.

Consignment is the act of consigning, the act of GIVING over to ANOTHER person or AGENT's charge, custody or care any MATERIAL or goods but retaining legal until the material or goods are SOLD

Consignment is the act of consigning, the act of giving over to another person or agent's charge, custody or care any material or goods but retaining legal until the material or goods are sold

• CONSIGNMENT A/C DR XXX 
• To PROFIT and LOSS A/C xxx

ABNORMAL loss means that loss which is CAUSED by unexpected or abnormal CONDITIONS such as accidents, machine breakdown, substandard material etc. From the accounting POINT of VIEW we can say that abnormal loss is that loss which occured over and above normal loss. 

Abnormal loss means that loss which is caused by unexpected or abnormal conditions such as accidents, machine breakdown, substandard material etc. From the accounting point of view we can say that abnormal loss is that loss which occured over and above normal loss. 

CONSIGNMENT A/C DR XXX 

To GOODS SENT on Consignment A/C xxx 

Consignment A/C Dr xxx 

To Goods Sent on Consignment A/C xxx 

STOCK on CONSIGNMENT A/C DR XXX

To Consignment A/C xxx

Stock on Consignment A/C Dr xxx

To Consignment A/C xxx

Stock reserve or buffer stock is a stock QUANTITY which is BASED on the NORMAL AVERAGE expected consumption during the lead-time to replenish depleted stock.

Stock reserve or buffer stock is a stock quantity which is based on the normal average expected consumption during the lead-time to replenish depleted stock.

The additional COMMISSION for which the consignee guarantees debts is CALLED Del Credere Commission. The agent is responsible for BAD debts but not for loss DUE to dispute between the BUYER and the seller. Del Credere Commission is payable on total sales and not merely on credit sales.

The additional commission for which the consignee guarantees debts is called Del Credere Commission. The agent is responsible for bad debts but not for loss due to dispute between the buyer and the seller. Del Credere Commission is payable on total sales and not merely on credit sales.

When goods are dispatched, the consignor MAKES out a " Proforma Invoice" that is, a statement which looks like a regular invoice but which does not make the consignee RESPONSIBLE to PAY the AMOUNT named. This proforma invoice is known as ACCOUNT Sales.

When goods are dispatched, the consignor makes out a " Proforma Invoice" that is, a statement which looks like a regular invoice but which does not make the consignee responsible to pay the amount named. This proforma invoice is known as Account Sales.

• CONSIGNOR PERSONAL A/C DR XXX 
• To COMMISSION A/C xxx

Process account is to be CREDITED by ABNORMAL loss account with cost of MATERIAL, labor and overhead equivalent to good units and the loss due to abnormal is TRANSFERRED to costing Profit and Loss account.

Process account is to be credited by abnormal loss account with cost of material, labor and overhead equivalent to good units and the loss due to abnormal is transferred to costing Profit and Loss account.

CONSIGNMENT A/C DR XXX

To CONSIGNEE's PERSONAL A/C xxx

Consignment A/C Dr xxx

To Consignee's Personal A/C xxx

CONSIGNMENT A/C DR XXX 

To CONSIGNEE's PERSONAL A/C xxx

Consignment A/C Dr xxx 

To Consignee's Personal A/C xxx

An invoice is a commercial document that itemizes a TRANSACTION between a BUYER and a seller. An invoice will USUALLY include the quantity of purchase,price of goods and / or services, date, PARTIES involved, unique invoice number and TAX information. 

An invoice is a commercial document that itemizes a transaction between a buyer and a seller. An invoice will usually include the quantity of purchase,price of goods and / or services, date, parties involved, unique invoice number and tax information. 

Person or FIRM ( usually the seller) who delivers a consignment to a carrier for TRANSPORTING it to a consignee ( usually the buyer) NAMED in the transportation DOCUMENTS. OWNERSHIP ( title) of the goods remains with the consignor until the consignee pays for them in full.

Person or firm ( usually the seller) who delivers a consignment to a carrier for transporting it to a consignee ( usually the buyer) named in the transportation documents. Ownership ( title) of the goods remains with the consignor until the consignee pays for them in full.

If the ACTUAL loss of a PROCESS is LESS than that of expected loss then the difference between the TWO will be treated as abnormal GAIN.

If the actual loss of a process is less than that of expected loss then the difference between the two will be treated as abnormal gain.

In a contract of carriage, the CONSIGNEE is the entity who is financially RESPONSIBLE ( the buyer) for the receipt of a shipment. GENERALLY, but not ALWAYS,the consignee is same as the receiver.

In a contract of carriage, the consignee is the entity who is financially responsible ( the buyer) for the receipt of a shipment. Generally, but not always,the consignee is same as the receiver.

The stock lying in the hands of CONSIGNEE at the end of accounting year is valued at cost or MARKET price whichever is less. The cost of UNSOLD stock or closing stock should be valued at cost to the consignor plus PROPORTIONAL non- recurring expenses incurred by the consignor and consignee.

The stock lying in the hands of consignee at the end of accounting year is valued at cost or market price whichever is less. The cost of unsold stock or closing stock should be valued at cost to the consignor plus proportional non- recurring expenses incurred by the consignor and consignee.

No ENTRY is to be MADE in the books of CONSIGNEE for VALUATION of STOCK. 

No Entry is to be made in the books of consignee for valuation of stock. 

Normal LOSS means that loss which is inherent in the processing operations. It can be expected or anticipated in advance i.e. at the TIME of ESTIMATION.

Normal loss means that loss which is inherent in the processing operations. It can be expected or anticipated in advance i.e. at the time of estimation.

CASH ( or BANK) A/C DR xxx

To Consignor's PERSONAL A/C xxx

Cash ( or Bank) A/C Dr xxx

To Consignor's Personal A/C xxx

ABNORMAL GAIN= ACTUAL PRODUCTION-Expected Production.

Abnormal Gain= Actual Production-Expected Production.

1. Consignment Account: It is a nominal account. It is in fact a Special TRADING and Profit and Loss Account. The balance, in this account, represents either profit or loss on consignment which is finally transferred to General Profit and Loss Account. 
2. CONSIGNEE's Personal Account: It is a personal account. It is MAINLY prepared to ascertain the amount due from the consignee.
3. Goods SENT On Consignment Account: it is a REAL account.

Value of unsold STOCK= COST PRICE of CLOSING Stock+ Proportionate non- RECURRING Expenses 

Value of unsold stock= Cost Price of Closing Stock+ Proportionate non- Recurring Expenses 

CONSIGNOR PERSONAL A/C DR XXX 

To COMMISSION A/C xxx

Consignor Personal A/C Dr xxx 

To Commission A/C xxx

Some concerns prefer not to MIX cost of goods SENT on consignment, sales and expenses in the same account. In such a case, an account, called Consignment Stock Account is opened and debited by the cost of OPENING stock in the hands of the consignee and the cost of goods sent.

Some concerns prefer not to mix cost of goods sent on consignment, sales and expenses in the same account. In such a case, an account, called Consignment Stock Account is opened and debited by the cost of opening stock in the hands of the consignee and the cost of goods sent.

1. When the goods are delivered to the agent by the owner for selling purposes is known as consignment whereas a transaction in which goods are exchanged for a price is known as a sale. 
2. The Parties involved in consignment are Consignor and CONSIGNEE sharing the RELATIONSHIP of a PRINCIPAL and agent whereas the parties involved in sale are SELLER and buyer sharing the relationship of a creditor and debtor.

The cost of normal loss is considered as PART of the cost of production in which it occurs. If normal loss UNITS have any realisable SCRAP VALUE, the process account is credited by that AMOUNT. If there is no abnormal gain, then there is no necessity to maintain a separate account for normal loss.

The cost of normal loss is considered as part of the cost of production in which it occurs. If normal loss units have any realisable scrap value, the process account is credited by that amount. If there is no abnormal gain, then there is no necessity to maintain a separate account for normal loss.

STOCK On CONSIGNMENT A/C DR XXX 

 To Consignment A/C xxx 

Stock On Consignment A/C Dr xxx 

 To Consignment A/C xxx