Consignment Accounting Problem Solving: Understanding Consignment Sales Accounting Entries

The video tutorial covers consignment accounting, focusing on invoicing goods above cost price. It details the process of recording initial entries, handling sales and returns, managing expenses, and calculating commissions. The tutorial also explains the final settlement process and how to calculate profit or loss on consignment transactions.

What is the primary focus of consignment accounting as introduced in the session?

• Managing inventory levels

• Calculating profit margins

• Invoicing goods above cost price

• Recording sales transactions

How is the loading on goods calculated in consignment accounting?

• By multiplying the cost price by the invoice price

• By adding the cost price to the invoice price

• By subtracting the cost price from the invoice price

• By dividing the invoice price by the cost price

What is the entry for consigner's expenses in consignment accounting?

• Consignment account debit to cash/bank

• Cash/bank debit to consignment account

• Consignment account credit to cash/bank

• Cash/bank credit to consignment account

How are goods returned by the consignee recorded?

• At the discounted price

• At the invoice price

• At the cost price

• At the market price

What happens to the loading when goods are returned?

• It is reversed

• It is added to the consignment account

• It is doubled

• It is ignored

Who bears the loss of bad debts in consignment accounting?

• The consignee

• The bank

• The consigner

• The customer

What is the commission rate for Kantilal on total sales?

• 3% normal commission and 1% del credere commission

• 6% normal commission and 2% del credere commission

• 5% normal commission and 3% del credere commission

• 4% normal commission and 2% del credere commission

How is the final balance settled between Kantilal and Motilal?

• Through cash/bank remittance

• Through a new consignment

• By adjusting the invoice price

• By issuing a credit note

What is the purpose of reversing the loading in consignment accounting?

• To increase the profit

• To find the net cost

• To adjust the sales price

• To calculate the commission

What is the final step in the consignment accounting process?

• Calculating the closing stock

• Issuing a new invoice

• Preparing the consignment account

• Calculating profit or loss