Introduction to Consignment Accounting: Valuation of Stock on Consignment

The video tutorial explains how to value stock in a consignment business, using a detailed example involving barrels of oil. It covers the process of calculating closing stock value, addressing both abnormal and normal losses, and emphasizes the importance of including all direct and non-recurring expenses in the valuation. The tutorial concludes with the final calculation of the closing stock value.

What is the initial cost per barrel of oil consigned by Central to Lubrizol Limited?

• $750

• $800

• $1000

• $1200

Which of the following is considered a direct expense in consignment?

• Selling expenses

• Insurance

• Godown rent

• Market value

How many barrels were destroyed in transit, resulting in an abnormal loss?

• 25 barrels

• 40 barrels

• 50 barrels

• 75 barrels

What type of expenses are added to the consignment cost by the consignee?

• Selling expenses

• Market expenses

• Non-recurring expenses

• Recurring expenses

How many barrels were lost due to fire in the godown?

• 75 barrels

• 50 barrels

• 40 barrels

• 25 barrels

What is the impact of normal loss on the quantity of goods?

• No impact

• Increases cost

• Decreases quantity

• Increases quantity

How many barrels were lost due to leakage, considered as normal loss?

• 75 barrels

• 50 barrels

• 40 barrels

• 25 barrels

What is the final number of barrels considered as closing stock?

• 300 barrels

• 250 barrels

• 160 barrels

• 200 barrels

Which value is used to determine the closing stock if market value is not provided?

• Net realizable value

• Selling price

• Cost

• Market value

What is the calculated value of the closing stock?

• $170,000

• $160,000

• $150,000

• $141,633