Consignment Accounts from "summary" of Modern Accountancy For Xi & Xii by Ganga Dhar Pandey
Consignment accounts are an important aspect of accounting and are used to track goods that have been sent out on credit. They are used to record shipments of goods to customers who do not pay for them until their own customers pay them. By tracking these accounts, businesses can ensure that their customers pay them on time.- Consignment accounts refer to a type of transaction between two or more entities, where goods are sent from the seller to the buyer without any ownership rights transferring to the latter party until the goods get sold.
- It is important for the consignee to keep track of the goods since all the profits need to be accounted for before handing it over to the consignor.
- In such transactions, the consignor sends out the goods as already and retains some control over them until they are bought by a customer.
- The consignor owns the goods that have been dispatched, while the consignee has the authority to stock, display, sell and take back the goods on behalf of the consignor.
- Whenever a shipment is made, a consignment account should be opened in order to report the details of the discharged merchandise accurately.
- The consignor must bear the cost for the transportation of goods when they are initially delivered, along with upkeep costs for any stocks left unsold after tenure expires.
- This type of account generally requires periodical reconciliation between the both parties.
