Consignment can not be treated as sales of goods. It is different from
sales. The difference between consignment and sales are as follows:
1. Ownership Consignment: The ownership of the goods remains with the consignor until sales is effected by the consignee. Sales: The ownership of the goods immediately transferred to the buyer when sale is effected.
2. Relationship Consignment: The relationship between the consignor and consignee are of principal and agent. Their relation ship are continued till terminated. Sales: The relationship between the two parties are that of seller and buyer and they terminated as soon as payment is made and goods are delivered.
3. Expenses Consignment: The expenses incurred by the consignee to execute sale and the expenses incurred by consignor to send the goods to the consignee, both are borne by the consignor. Sales: Any expenses incurred after the sale is not borne by the seller.
4. Risk Consignment: The risk of goods under consignment is always with the consignor. Sales: When the sale is made the risk is transferred to the buyer.
5. Return Of Goods Consignment: Consignee can return goods to the consignor since those are properties of consignor. Sales: A buyer can not return goods unless the goods are found defective or damaged or the seller agrees to.
6. Statement Consignment: For giving details about the goods sold and expenses incurred by him, consignee sends the account sales (generally known as sale patti) to consignor. Sales: The buyer need not submit any account sales to the seller.
7. Stock Consignment: The unsold stock with the consignee will be treated as a stock of the consignor. Sales: In case of sale, the buyer's unsold stock do not attract the seller.
8. Commission Consignment: Commission is the main consideration of consignment. The consignee performs the selling activity only for commission. Sales: Profit is the main consideration of sales.
9. Agreement Consignment: In Consignment a agreement has to be prepared between consignor and consignee, mentioning all the terms & conditions and expenses to be borne by the consignor and commission to be paid to the consignee.
Sales: No such agreement is to be prepared, infact a PO is being raised by the buyer and seller acknowledges the same.
10. Accounting Treatment
Consignment: As despatches are made as transfer of goods, these are shown as consignment stock (under current assets). Sales are effected only after receiving the account sale statement from the consignee.
Sales:Sales entries are passed at the time to dispatching of goods.
11. Statutory Forms (Sales Tax Forms)
Consignment: The consignee has to issue Form F to the consignor for the sales made by him of the goods received. At the same time the consignor mentioned in the waybill that the goods are despatched as branch transfer.
Sales:Buyer has to issue Form C, Form H, E-15 whatever depending on the nature of purchase made by him.
Hope you all are clear and can differentiate between a normal sale and a consignment sale.
1. Ownership Consignment: The ownership of the goods remains with the consignor until sales is effected by the consignee. Sales: The ownership of the goods immediately transferred to the buyer when sale is effected.
2. Relationship Consignment: The relationship between the consignor and consignee are of principal and agent. Their relation ship are continued till terminated. Sales: The relationship between the two parties are that of seller and buyer and they terminated as soon as payment is made and goods are delivered.
3. Expenses Consignment: The expenses incurred by the consignee to execute sale and the expenses incurred by consignor to send the goods to the consignee, both are borne by the consignor. Sales: Any expenses incurred after the sale is not borne by the seller.
4. Risk Consignment: The risk of goods under consignment is always with the consignor. Sales: When the sale is made the risk is transferred to the buyer.
5. Return Of Goods Consignment: Consignee can return goods to the consignor since those are properties of consignor. Sales: A buyer can not return goods unless the goods are found defective or damaged or the seller agrees to.
6. Statement Consignment: For giving details about the goods sold and expenses incurred by him, consignee sends the account sales (generally known as sale patti) to consignor. Sales: The buyer need not submit any account sales to the seller.
7. Stock Consignment: The unsold stock with the consignee will be treated as a stock of the consignor. Sales: In case of sale, the buyer's unsold stock do not attract the seller.
8. Commission Consignment: Commission is the main consideration of consignment. The consignee performs the selling activity only for commission. Sales: Profit is the main consideration of sales.
9. Agreement Consignment: In Consignment a agreement has to be prepared between consignor and consignee, mentioning all the terms & conditions and expenses to be borne by the consignor and commission to be paid to the consignee.
Sales: No such agreement is to be prepared, infact a PO is being raised by the buyer and seller acknowledges the same.
10. Accounting Treatment
Consignment: As despatches are made as transfer of goods, these are shown as consignment stock (under current assets). Sales are effected only after receiving the account sale statement from the consignee.
Sales:Sales entries are passed at the time to dispatching of goods.
11. Statutory Forms (Sales Tax Forms)
Consignment: The consignee has to issue Form F to the consignor for the sales made by him of the goods received. At the same time the consignor mentioned in the waybill that the goods are despatched as branch transfer.
Sales:Buyer has to issue Form C, Form H, E-15 whatever depending on the nature of purchase made by him.
Hope you all are clear and can differentiate between a normal sale and a consignment sale.
