Important Terms Used In Accounting For Consignment Of Goods

1. Consignment

The dispatch or transfer of goods to an agent for the purpose of sale on behalf and risk of principal is known as consignment

2. Consignor

The owner or principal who sends the goods to agent is known as consignor.

3. Consignee

The agent to whom the goods are sent is known as consignee.

4. Consignment Outward And Consignment Inward

The goods sent by consignor to the consignee is consignment outward. The same goods will be consignment inward for the consignee.

5. Pro-forma Invoice

It is an invoice prepared by the consignor and sent to the consignee detailing the weight or quantity and the price at which the goods are to be sold. It is an evidence of consigned goods indicating the price at or above the consignee will have to sell the goods. Though it seems as a sales invoice in format, it is quite different from it. A sales invoice is a document sent by a seller to buyer which charges the buyer with the value of goods.

6. Account Sales

The consignee has to inform its consignor about sale and expenses incurred by him for selling activity. For this purpose, the consignee has to prepare a statement which is known as account sale. An account sale is a statement of sales and other expenses incurred by the consignee while performing sale. It can be taken as a base of consignor's books of account for recording sales and expenses incurred by the consignee for selling the consigned goods.