Consignment Accounting Problem Solving: Journal Entries, Closing Accounts, and Transferring Profit/Loss

The video tutorial provides a comprehensive guide on consignment accounting, covering the basics of consignment transactions, how to record journal entries, and the process of closing accounts and final settlement. It explains the roles of consigner and consignee, the handling of bills of exchange, and the calculation of commissions. The tutorial also emphasizes the importance of checking for closing stock and provides practical examples of journal entries.

What is the role of Ramdas in the consignment transaction?

• Banker

• Consignee

• Customer

• Consigner

What is the initial cost of goods consigned by Sennen Company to Ramdas?

• 20,000

• 25,000

• 35,000

• 15,000

Which account is debited when Sennen Company pays freight and insurance charges?

• Commission Account

• Cash Account

• Consignment Account

• Sales Account

What is the percentage of commission charged by Ramdas?

• 4%

• 3%

• 2%

• 1%

How is the bill of exchange treated in the books of Sennen Company?

• As an expense

• As an asset

• As a liability

• As income

What is the final settlement amount received by Sennen Company from Ramdas?

• 13,600

• 20,000

• 35,000

• 25,000

What is the purpose of preparing a working note in consignment accounting?

• To determine commission

• To record sales

• To calculate taxes

• To find the balancing figure

Why is the consignment profit not recorded in the books of the consignee?

• It is a liability for the consignee

• It belongs to the consigner

• It is not a part of the transaction

• It is an expense for the consignee

What is the significance of bill discounting in this consignment transaction?

• It reduces the consignment cost

• It decreases the commission

• It provides immediate cash flow

• It increases the consignment profit

What adjustment is necessary if there is unsold stock at the end of the consignment period?

• Add to sales

• Charge it as an expense

• Ignore it

• Record as closing stock