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A legal activity which is carried out for the purpose of earning profit is called business.

=> Expansion of business:

Building Dividing in to departments Capital For making Departments purpose

Large Capital is required Building Staff is required Skilled Labour is required For making Branches purpose

The Act of sending the goods from manufacturer (Owner) to a person (Agent) for the purpose of sale on the behalf of owner. Two Parties of the Consignment: 1. Consignor 2. Consignee Principal Agent

Consignee takes his own commission. Sending goods

Performa Invoice Consignor Account Sales Consignee

Performa Invoice: A Document prepared and send by consignor to consignee is called Performa invoice. Section of Performa Invoice: 1) Quantity of goods supplied to Consignee 2) Quality of goods 3) Description of goods

4) Price of goods Account Sale Performa: A Document prepared and send by the consignee to the consignor after the sale of goods is called Account Sale Performa. Section of Account Performa 1) Goods sold 2) Amount Realized 3) Expenses, Commission 4) Net amount due to Consignor

Normal commission = which is actually paid to consignee Overwriting Commission = which is offered to consignee in the way of large no. sales Exmp: good of Rs/- 100 sold in Rs/-125 Del-Credit Commission = which is offered to consignee to save or recover the debts from account receivable.

Consignment Account
Expenses----------Consignment a/c Income -----------Consignment a/c Consignor Book 1. When goods send to consignee Consignment a/c To goods sent on consignment a/c 2. Expenses paid by Consignor Consignment a/c Cash a/c DR CR Consignee Book No Entry DR CR DR CR

No Entry Consignor a/c To Cash/ Bank/ Bill Payable Consignor a/c Cash a/c DR CR DR

3. When advance amount received by consignor Cash/ Bank/ Bill receivable DR To Consignee CR When Expenses Paid By Consignee Consignment a/c DR To Consignee CR CR 5. Goods Sold By Consignee Consignee a/c Consignment a/c 6. When Commission is recorded Consignment a/c Consignee a/c DR CR 4.

Cash a/c Debtor a/c Consignor a/c Consignor a/c Commission a/c



7. When Stock On Consignment is recorded

Stock on consignment a/c To Consignment a/c

DR CR No Entry

Consignment Account



In the case of Profit

Consignment a/c DR Profit & Loss a/c CR

In the case of Loss

Profit & Loss a/c DR Consignment a/c CR

When goods send on Consignment a/c Closed Goods Send On Consignment a/c To Trading A/c DR CR