Consignment is an act of sending the goods by the owner to his agent, who agrees to collect, store and sell them on the risk and behalf of the owner on commission basis.

The manufacturer and wholesale who sends his goods for sale purpose to his agent is known as consignor.

The person to whom the goods are sent for sale purpose is known as consignee.

When goods are dispatched by the consignor to the consignee, it will be a consignment outward from consignor's view point.

When goods are dispatched by the consignor to the consignee, it will be a consignment inward from consignor's view point.

A consignor may have a number of agents in different parts of the country or abroad to whom he sends goods for sale.So, it will be very useful for him to maintain a separate subsidiary register with a view to keep full record of the goods consigned. This special register is named as consignment outward book or journal.

A consignor may have a number of consignors from whom receives goods for sale, so it will be very convenient for him to maintain a separate subsidiary register named as "consignment inward book or journal".

It is a report prepared by consignee and sent to the consignor, periodically, which shows the details about the sale of goods; the price at which goods are sold; expenses paid by the consignee on behalf of consignor; agent`s commission and the net balance for which he is liable.



It is a forwarding letter sent by consignor to consignee along with the goods containing particulars as to the name of the item; number and the price.

In connection with the consignment, the remuneration of the consignee for selling the goods of the consignor is called commission.

11)Delcredre commission:
The extra commission which is paid to consignee, if loss on account of bad debts is borne by him.

Any loss which occur`s due to fire, accident, theft, negligence etc.is known as abnormal loss of stock.Due to this loss consignment profit is not reduced.

13)Normal loss of stock:
A loss which occur`s due to natural causes e.g. normal leakage, loss in weight due to nature of goods etc. is treated as 'normal loss'. Such loss in inflates the value of closing stock.

14)Overriding commission:
It is normally granted by consignor when he desires his agent to work hard to push a new line of product in the market.

This is by nature a profit or loss account. All expenses related to consignment are debited and all revenue are credited to this account. The difference between the two sides is known as profit or loss on consignment.