CONSIGNMENT
ACCOUNT
Consignment
accounts are concerned with goods sent to an agent who will sell the goods on
behalf of his principal. That is, goods sent to an agent for sale on behalf of
the principal. The agent here is a consignee (receiver of a consignment)
and the principal is a consignor (sender of a consignment).
Terminologies in consignment accounts.
1.
Del
credere agent. Occasionally an agent may sell part of the goods on credit. This
credit sales may result in bad debts that will affect the principal. If however
the agent guarantees against bad debts, he (agent) receives extra commission in
consideration of such undertaking. Thus, he is called del credere agent and the commission he receives is del
credere commission. In most cases the commission is shown separately from
the ordinary commission.
2.
Account
sales. This is a statement showing the gross proceeds, expenses incurred,
agents commission and the net proceeds due to the consignor. This is the
document that helps the consignor to make further entries in his books of
account.
3.
Consignment
outwards. When goods are sent by the consignor to the consignee.
4.
Consignment
inwards. When goods are received by the consignee.
5.
E&O.E.
Errors and omissions expected. That is the consignor will accept any error
caused in the transaction.
6.
Pro
forma invoice. Since the goods are not sold to the agent, a pro forma invoice
is used when the goods are sent to him. It means for form’s sake.
NB: This document
does not change but communicates information and it will inform the agent of
the price at which he is expected to sell the goods.
Test your
understanding
Mention the company that practice consignment
business. State ten.
Compiled by: Akerele Adedayo E.
Enquires contact:
08162875768,
08057415945
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