Chapter #3 CONSIGNMENT

Chapter # 3 CONSIGNMENT  Q.1: What do you know about account sales? Ans: A statement which is periodically sent by the consignee to the consignor, showing the details about goods sold, price realize , his own commission and expenses incurred by him on consignment etc, is called account sales. Q.2 What entry will be passed by consignee if goods are sold on credit in the absence of del credere commission? Ans: No entry will be passed by consignee. Q.3: What entry will be passed by consignor, if some amount is become bad on credit sale in the absence of del credere commission? Ans: Bad debts A/c To Consignment debtors A/c Q.4: What entry will be passed by consignee, if some amount is not received on credit sale in the absence of del credere commission? Ans: No entry Q.5: Define del credere commission? Ans: An additional commission paid to a consignee who guarantees the payment in case of credit sale is called del creder commission. Q.6: What is Overriding commission? Ans: An additional commission which is paid by consignor to consignee for introducing new product in the market is called overriding commission. Q.7: What do you know about stock on consignment? Ans: Goods which remains unsold at the time of sending Account sales by the consignee to the consignor or at the end of consignor accounting period. Q.8: What do you know about normal loss? Ans: The loss which is unavoidable or arises due to natural causes is called normal loss. For example, leakage etc. Q.9: What do you know about abnormal loss? Ans: A loss which is avoidable or arises due to abnormal causes is called abnormal loss. Q.10: Differentiate between normal and abnormal loss? Ans: Normal loss Abnormal loss A loss which is in the routine of business. (a)   A loss which is out of routine of business. A loss which is unavoidable. (b)  A loss which is avoidable A loss which can not be controlled. (c)  A loss which can be controlled through precautionary measures. Q.11: Define Consignment a/c? Ans: An account which is prepared to record particular consignment transactions is called consignment Account. Q.12: What is outward consignment? Ans: A consignment from consignor’s point of view is called outward consignment. Q.13: What is Inward consignment? Ans: A consignment from consignee’s point of view is called inway consignment. Q.14: What is consignment? Ans: A process in which goods are sent by consignor to consignment especially with the objective of say. Q.15: Differentiate between sale and consignment? Ans: 1)     In consignment, there is a relation of principal and agent. In sale, there is a relation of seller and buyer. 2)     In case of consignment, property in goods is not transferred to consignee. In case of sale, property in goods is transferred to buyer. Q.16 Name any Two objectives of invoice price? Ans: i)                   To realize the highest possible price. ii)                To keep the profit on consignment secret from consignee. Q.17: What do you know about non – recurring expenses? Ans: Expenses which are incurred upto consignee’s godown are known as non – recurring expenses For example, loading unloading and insurance etc. Q.18: What is loading? Ans: The process of adjusting invoice price to the cost price is called unloading to The difference between cost price and invoice price of goods sent on consignment is called loading. Q.19: Define Commission in Consignment? Ans: A remuneration paid by consignor to consignee for sale of goods normally on gross sales proceeds is called Commission. Q.20: Define Consignor? Ans: A person who sends his goods to agent (Consignee) for sale against commission is called Consignor. Q.21: Define Consignee? Ans: A person to whom goods are sent for sale against commission in consignment is called consignee. Q.22: Define proforma Invoice? Ans: A statement which is sent by consignor to consignee alongwith goods containing details about quality, quantity, price etc. for guiding the consignee about sale of consignee is called proforma invoice. Q.23: What do you know about direct expenses? Ans: Expenses which are incurred on consignment from consignor’s business place upto consignees godown are called direct expenses. Q.24: What do you know about indirect expenses? Ans: Expenses which are incurred on consignment after reaching the goods to consignee’s godown are called indirect expenses.

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