Common Mistakes in Consignment Accounting and How to Avoid Them

The video tutorial covers common mistakes in consignment accounting, emphasizing the importance of correct ledger entries, handling commissions, and sales transactions. It highlights errors in recording credit sales and managing bad debts, and provides guidance on valuing closing stock and losses. The tutorial stresses the need for thorough practice and understanding of journal entries to avoid errors and improve efficiency in solving problems.

What is the correct entry for recording freight and insurance expenses in the consignment account?

• Consignment account debit to cash or bank account

• Consignment account credit to expenses account

• Expenses account debit to cash or bank account

• Cash or bank account debit to expenses account

When sales are made by the consignee, which account should be debited?

• Cash account

• Consignee account

• Sales account

• Consignment account

What should you do to avoid missing out on giving effect to commission in consignment accounting?

• Ignore commission if not mentioned

• Mark unsolved items while reading the question

• Calculate commission only on cash sales

• Calculate commission at the end of the question

If Dell Credit Commission is not given to the consignee, who is responsible for collecting from debtors?

• Consignee

• Consigner

• Both consignee and consigner

• Neither consignee nor consigner

What should be considered when valuing the cost of closing stock on consignment?

• Only the purchase cost

• All expenses incurred by consignee

• Proportionate direct expenses

• Only the selling expenses

What is a common error when goods are sent to consignee at invoice price?

• Not reversing the loading

• Ignoring direct expenses

• Including selling expenses in cost

• Calculating loading on total sales

Why is it important to practice journal entries for consignment accounting?

• To avoid confusion and save time in exams

• To increase the number of entries

• To eliminate the need for ledger accounts

• To reduce the number of ledger accounts