Introduction to Consignment Accounting: Consignment vs Sales

The video tutorial explains the differences between consignment and sale. Consignment involves transferring goods to an agent (consignee) for sale on behalf of the owner (consigner), while a sale involves a direct transaction between a seller and a buyer. Key differences include the transfer of possession and ownership, the roles of parties involved, invoice types, expense responsibilities, and risk management. In consignment, ownership remains with the consigner until the final sale, whereas in a sale, both ownership and possession transfer to the buyer. The video also covers the implications of profit, loss, and consideration in both scenarios.

What is the primary difference between consignment and sale?

• In a sale, goods are not exchanged for a price.

• In consignment, ownership is transferred immediately.

• Consignment involves a direct sale to the buyer.

• Consignment is a transfer of goods for sale by an agent.

In a consignment, what is the relationship between the consigner and consignee?

• Owner and Tenant

• Buyer and Seller

• Principal and Agent

• Creditor and Debtor

What happens to ownership in a consignment until the goods are sold to the final consumer?

• Ownership remains with the consigner.

• Ownership is shared between consigner and consignee.

• Ownership is transferred to the consignee.

• Ownership is transferred to the buyer immediately.

What type of invoice is generated in a consignment?

• Credit Invoice

• Sales Invoice

• Pro Forma Invoice

• Regular Invoice

Who bears the expenses incurred by the consignee in a consignment?

• The consignee

• The buyer

• The consigner

• The seller

In a consignment, what can the consignee do with unsold goods?

• Sell them at a discount

• Return them to the consigner

• Keep them permanently

• Transfer ownership to the buyer

Who bears the risk of loss in a consignment before the goods are sold?

• The consignee

• The buyer

• The consigner

• The seller