Anda di halaman 1dari 28

DEPRTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH

Name : CH. ANURADHA


Designation : Lecturer
Branch : Commercial & Computer Practice
Institute : Govt. Polytechnic for women,
Bheemunipatnam
Year/Semester : IV semester
Subject : Accountancy-III
Sub-code : CCP-402
Topic : CONSIGNMENT ACCOUNTS
Sub Topic : Concept of consignment accounts
Duration : 50 Minutes
Teaching aids : Power Point Presentation
CCP402.1 1
Objectives:

On completion of this period, you would be


able to:
 Understand the need for Consignment
Accounts
 Differentiate between Consignment and
Ordinary sale
 Know the terms used in Consignment

CCP402.1 2
How can a Trader increase his sales?

 By opening a number of branches in different


parts of the country

CCP402.1 3
Is it possible ?
 Difficult

Why ?
 Because it requires lot of manpower
and finance

CCP402.1 4
Then what is the alternative?

Employ persons in different areas on Commission


basis,
 To act as the agents
 To sell the goods
 On behalf of the proprietor

CCP402.1 5
 To send the goods to agents at other places for sale on
commission basis is called Consignment

CCP402.1 6
Concept of Consignment:

A trader sends goods to the Agent,


 To be sold by the agent
 On Trader’s behalf
 On Commission basis

CCP402.1 7
Terminology used:

 Trader : Consignor
 Agent : Consignee
 Goods sent : Stock on Consignment

CCP402.1 8
Distinction between consignment and
sale
Consignment Sale
Ownership remains with Ownership Passes to the
the consignor buyer
Relationship between Relationship between
consignor and consignee Seller and Buyer is of
is of Principal and Agent creditor and debtor
Goods can be returned In all cases buyer cannot
by consignee at any time return
Expenses incurred by Buyer has to bear the
consignee recovered expenses

CCP402.1 9
Differences contd..
Consignment Sale
Consignee sends Account No such statement is
sales to consignor prepared

Consignor pays commission No such payment to the


to consignee buyer
Consignor send Proforma Seller sends ordinary invoice
Invoice to consignee to the buyer
No order from the There must be order from the
consignee buyer
Risk is taken by consignor Risk is to be borne by the
alone buyer

CCP402.1 10
Terms used in Consignment

 Proforma Invoice
 Account Sales
 Advance
 Commission

CCP402.1 11
Proforma Invoice

 A Statement
 prepared by consignor
 sent to the consignee

CCP402.1 12
Proforma Invoice contains
 Details of goods consigned
 like quality, quantity, packing & markings and
Price
 It is useful for calculation of customs duties
 Mode of marketing
 It helps the consignee in fixing the selling price of
goods
 The price given may be cost price or market price
 It is the minimum price at which the consignee is
allowed to sell
CCP402.1 13
Advance

 Amount received from the consignee


 Part of the total value of the goods consigned
 For safety of the consignor
 A Bill of Exchange drawn on the consignee by
consignor
 Consignor can discount the bill with the bank
 The advance is deducted from the Sale Proceeds

CCP402.1 14
Commission
 A reward payable to the consignee for selling
goods on behalf of the consignor
 Fixed percentage
 Calculated on gross sales

CCP402.1 15
Types of commission

 Ordinary commission / commission


 Delcredre commission
 Over riding commission

CCP402.1 16
Ordinary commission

 Fixed percentage
 Calculated on gross sales
 Paid by the consignor
 To the consignee
 For selling the goods

CCP402.1 17
Delcredre commission
 In case of credit sales
 If the amount is not received from debtors
 Such loss of bad debts is generally borne by consignor
 If consignee agrees to bear this loss of bad debts
 Then the Consignor will pay him extra commission
 This is called Delcredre commission

CCP402.1 18
Over riding Commission

 Special commission
 In addition to ordinary commission
 To push a new line of product
 Calculated on total sales

CCP402.1 19
Account sales

 Periodical statement
 Prepared by the consignee
 Sent to the consignor

CCP402.1 20
Account sales contains

 Details of goods sold (Gross Sale Proceeds)


 Expenses incurred by the consignee
 Commission payable to consignee
 Net amount due to the consignor

CCP402.1 21
Specimen of Account sales
Account sales of Consignee for the a/c risk of consignor

Particulars Rs. Rs.


25 machines @ Rs.200 5,000
Less: Expenses 500
Commission 500 1,000
4,000
Less: Advance 2,000
Net Amount due to Consignor

2,000
E. & O.E. xxxxxxxx

CCP402.1 22
Summary

We have discussed about


 Concept of consignment
 Differences between ordinary sale and
consignment
 Terms used in consignment
 Proforma Invoice
 Advance
 Commission
 Account sales and its Proforma
CCP402.1 23
Quiz

1. The person who sends the goods to the agent


for selling on his behalf is called
a. Consignor
b. Consignee
c. Buyer
d. Seller

CCP402.1 24
Quiz contd..

2. Proforma Invoice is prepared by


a) Consignor
b) Consignee
c) Customer
d) None of the above

CCP402.1 25
Quiz

1. Account Sales is prepared by


a) Consignor
b) Consignee
c) Customer
d) None of the above

CCP402.1 26
Quiz

1. Generally, delcredre commission is calculated on


a) Cash sales
b) Credit sales
c) Total sales
d) No sales

CCP402.1 27
Frequently asked Questions

1. What is consignment. How does it differ from


an ordinary sale.
2. What is delcredre commission?
3. What is Account sales? Give specimen form.

CCP402.1 28