Basic Accounting Transactions of Consignment

The video tutorial covers the basics of consignment accounting, detailing the common steps involved in consignment transactions. It explains the roles and responsibilities of the consigner and consignee, including expenses, sales, and commission. The tutorial also discusses the valuation of closing stock, profit or loss calculation, and the settlement process. Finally, it provides a brief overview of the next session's focus on journal entries.

What is the first step in the consignment process?

• Consignee sends goods to the consigner

• Consigner sends goods on consignment

• Consignee pays commission

• Consigner receives payment

Why is there no entry in the consignee's books when they receive goods?

• Because the consigner retains ownership

• Because the consignee has not paid

• Because the consignee owns the goods

• Because the goods are not yet sold

What might a consigner request from a consignee to mitigate risk?

• A detailed sales report

• An advance payment

• A longer payment term

• A higher commission rate

What expenses are accounted for by the consignee?

• Manufacturing expenses

• Selling expenses

• Insurance expenses

• Freight expenses

What is the next step after sales in the consignment process?

• Payment of commission to consignee

• Receipt of goods by consignee

• Settlement of accounts

• Valuation of closing stock

What must be valued at the end of the consignment period?

• Opening stock

• Closing stock

• Sales revenue

• Commission

What are the two possibilities for settling the balance with the consignee?

• Cash or cheque payment, or carrying forward the balance

• Returning unsold goods, or increasing stock

• Issuing a new consignment, or closing the account

• Increasing commission, or reducing expenses