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Consignment 1 Consignment would involve: a. Sale of goods between principal and agent b. Partnership business between parties c. Transfer of goods to agent by principal. d. Accommodation of bill Goods sent on consignment are recorded at a. Cost price b. Invoice price c. Selling price d. Catalogue price Loading on goods sent on consignment is the difference between: a. Selling price and cost price b. Invoice price and selling price c. Invoice price and cost price d. Credit price and cash price Majority of non-recurring expenses are normally incurred by a. Consignor b. Customer c. Carrier d. Consignee Consignee is entitled for a. Salary b. Expenses c. Commission on sales d. Profit Consignee is a. Agent of consignor b. Partner of consignor c. Principal of consignor d. Employee of consignor Consignee can claim a. For expenses on consignment b. For commission on sales effected c. Either a or b
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c. Transfer of goods to consignee to be sold on behalf of consignor. b. Invoice price. Document accompanying the goods are normally sent at invoice price. c. Difference between invoice price and cost price is termed as loading

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a. Consignor is the initiator incurs majority of the non recurring expenses.

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c. commission is the source of income for consignee.

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a. Agency principal relationship is prevailing.

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d. He is entitled for the commission and expenses on consignment

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d. Both a & b Goods lost in transit shall be accounted only at a. Cost price (including expenses) b. Invoice price (including expenses) c. Selling price (excluding expenses) d. Net realizable value To make consignee sell the goods sent on consignment, consignor shall a. Fix higher rate of commission b. Fix del credere commission c. Allow consignee to participate in profits d. Demand advance money in cash or Bills

a. Cost price is the base at which goods lost in transit shall be accounted. d. Demanding advance money means consignee though not taking risk, effectively investing money/moneys worth. This will result in he taking all possible steps to sell d. All the items referred shall qualify for removal of load.

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Loading is required for a. Goods sent on consignment b. Closing stock lying at consignees place c. Goods returned by consignee d. All of the above Non-recurring expenses incurred by consignor are loaded on a. All units sold by consignee b. All units sent by consignor c. All units unsold by consignee d. All units sent except damaged/lost Del credere commission is calculated on a. Total sales effected by consignee b. Credit sales effected by consignee c. Cash sales effected by consignee d. Total sales Sales returns effected by cnee Over riding commission is the commission on a. Additional commission on cash sales b. Additional commission on credit sales c. Extra revenue over normal sales d. None of the above NRV of the unsold stock is arrived at by
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b. All units sent by consignor irrespective of their ultimate disposition.

d. Total sales effected by consignee as reduced by returns if any. c. For extra efforts put in by the consignee, an award

c. Net realizable

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a. Multiplying the selling price and the unsold stock b. Calculating the future commission payable c. a-b d. a+b 15. Consignment account is a. Nominal account b. Real account c. Personal account d. Memorandum account Goods sent on consignment account is a a. Personal account b. Real account c. Nominal account d. Impersonal account Consignees personal account is prepared to find out a. Profit or loss on consignment account b. Sums due to or due from consignee c. Commission payable to consignee d. Appropriation of profit with consignee Insurance claim against abnormal loss account shall be transferred to a. Consignment account b. Profit and loss account c. Goods sent on consignment account d. Consignees personal account Consignee records all except a. Recurring expenses incurred by consignee b. Non recurring expenses incurred by consignee c. Commission eligible for sales d. Unsold stock held by consignee The document sent detailing the sales effected, unsold stock, expenses incurred by consignee is a. Pro-forma invoice
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value is the difference between normal sale value and the expenses to be incurred to realize the sale value. a. Nominal account. Prepared to find out profit/loss on consignment b. Real account. This reflects the stock sent out of normal business for consignment purposes b. To find the outstanding position with consignee

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b. Profit and loss account to which the difference between the cost and the claim will be transferred. d. Consignee records all transactions pertaining to him except the closing stock held by consignee c. Account sales is the name of the document sent by

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b. Current account c. Account sales d. Sales account Bad debts incurred by consignee, so he will not transfer the burden to consignor when he is paid a. Commission b. Over riding commission c. Del credere commission d. Commission on profit The balancing figure in goods sent on consignment account of a trader consignor is to be transferred to a. Purchases or trading account b. Manufacturing account c. Profit and loss account d. Retained as closing stock The following are part of non-recurring expenses: a. Freight b. Insurance c. Cartage d. All the above

consignee periodically

c. Del credere commission is paid by consignor to absorb the risk of bad debts.

a. Purchases or trading account

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Goods loss in transit cannot be recovered from the insurance company as consignee had taken del credere commission: Is it correct? a. Incorrect b. Correct c. Sometimes correct d. None of the above When goods are sent on consignment, consignment account shall be debited and credit shall be offered to a. Consignees account b. Purchases account c. Goods sent on consignment account d. Capital account of consignor While recording the transaction in the form of
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d. As part of the nonrecurring expenses all expenses incurred specifically for the consignment shall be taken for stock valuation purposes. a. It is incorrect. Del credere commission and claim on account of goods lost in transit have no connection at all. c. Goods sent on consignment account shall be credited for the movement of material

a. True. In either

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journal entry, there is no difference between cash sales and credit sales in the books of consignor. a. True b. False c. Not relevant d. Partly true Removal of loading on opening stock shall be debited to consignment account. a. True b. False c. Not relevant d. Partly true Removal of loading on closing stock shall be debited to consignment account. a. True b. False c. Not relevant d. Partly true Freight expenses incurred by the consignee for returning goods to consignor shall be added as non-recurring expenses for valuing closing stock. a. Correct b. Incorrect c. Partially correct d. None of the above In case consignee participates in the profit, expenses incurred in the return of unsuitable goods to consignor shall not be considered in the computation of profit entitlement a. It is correct for consignment b. It is correct for consignee c. It is incorrect for consignor d. It is incorrect in accounting

case, consignees account will be debited with corresponding credit to consignment account. b. False. Since opening stock appears on the debit side, loading is to be carried out on the credit side. a. It is true. As the closing stock appears on the credit side of consignment account, removal of load is to be shown on debit. b. Incorrect. Such freight expenses have no connection to the unsold stock.

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In case consignee participates in the profit,

b. It is correct for consignees entitlement of profit share. Cost of returning goods is purely the cost of faculty/unsuitable item sent by consignor not to be burdened for consignees profit share d. Expenses incurred

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expenses incurred in the return of unsuitable goods to consignor shall not be considered in the computation of profit on consignment a. It is correct for consignment b. It is correct for consignee c. It is incorrect for consignor d. It is incorrect in accounting Irrecoverable debts in consignees books shall be a. Debited to bad debts account b. Debited to Profit & Loss account c. Debited to consignors account d. Debited to Provision for bad and doubtful debts account Irrecoverable debts in consignees books shall be a. Debited to consignors account b. Debited to del credere commission account c. Debited to bad debts account d. Either a or b Treatment for normal loss in the valuation of closing stock is a. Ignore it b. Insure it c. Include it d. Inflate it Abnormal loss is a. Excessive loss b. Accidental loss c. Damage resulting into obsolete d. All of the above When the details of expenses met out by consignee is not provided, for valuation of stock purposes a. Consider all expenses of consignee b. Ignore all expenses of consignor c. Consider all expenses of consignor d. Ignore all expenses of both
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in consignment can never be ignored whatsoever. It is bad in accounting.

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c. Consignors account shall be debited in case of non-recovery of debts when no del credere commission is paid. d. Consignors account in case no del credere commission is taken or else del credere account a. Ignore it in the computation of closing stock value. However quantitatively the same shall be deducted d. Abnormal loss takes into account all these issues

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c. Consider all expenses of consignor as nonrecurring in nature.

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Provide for commission for unsold stock in the books of consignor on the lines of principle of conservatism a. Recommended practice b. Ignore it as the sale had not taken place c. Consider it as consignee will sell in the future d. Consider even the sale also in any case goods will be sold in the future Goods are sent at invoice price because a. Consignor wanted to preserve the secret of margin from consignee. b. As a matter of statutory requirement to accompany a document along with the consignment at probable selling price. c. Indicate the likely commission payable to consignee d. To value the closing stock at invoice price. Goods lost at consignees place shall be claimed only by a. Consignor b. Consignee c. Insurance company d. Godown owner Consignment business has a. Going concern concept b. Conservatism principle c. Dual aspect concept d. All the above The following statement is not false a. Consignment and sale are same b. Consignor and consignee are partners c. Unsold stock is valued lower of cost or NRV d. Consignment is like sale or return The following statement is not true a. Stock is valued at lower of cost or NRV b. Stock is to valued at purchase cost plus
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b. Ignore it as there is no obligation whatsoever for the unsold stock. Payment of commission will arise only when sale is over.

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b. As a matter of statutory requirement to satisfy authorities when checking takes place at check posts in the border of states when consignment moves. a. Consignor is the owner of the stock having insurable interest shall claim in the event of loss wherever. d. all the principles and concepts are present through out in consignment c. Unsold stock is valued lower of cost or NRV

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b. Stock is to be valued at purchase cost and pro-

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a. For cost ascertainment purposes it should be treated just like closing stock does not mean cost or NRV whichever is lower to be followed. Problems from 46 50 are based on the following illustration 1000 boxes costing Rs.250 each sent on consignment. Rs.10000 spent on freight. 20 boxes were damaged beyond repair. Insurance company paid Rs.4000. Consignee took delivery of 1000 boxes and spent for carriage and freight on taking delivery Rs.19600. Sold 900 units by consignee for Rs.412 each. Commission is 10% 46 What is the cost of damaged boxes? c. 5200. Cost @ 250 a. 5000 plus prorata expense b. 5239 incurred by consignor c. 5200 is to be taken.
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recurring expenses of consignee c. Del credere commission is calculated on total sales d. Consignment account is nominal account Non-recurring expenses/non-selling expenses incurred by consignee is taken in the computation of Abnormal loss reported at consignees godown a. False b. True c. Partly true d. Neither true nor false Non-recurring expenses/non-selling expenses incurred by consignee is taken in the computation of Abnormal loss reported on transit a. False b. True c. Partly true d. Neither true nor false Abnormal loss is treated like closing stock; therefore a. It should be valued only at cost b. It should be valued at NRV c. Lower of a and b d. None of the above

porationate nonrecurring expenses of both consignor and consignee. b. True. Expenses incurred by consignee shall be considered for accidental loss reported at consignees place a. False. Expenses of consignee are incurred after the report of loss. Hence not to be taken

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d. 8240 What is the loss to be transferred to profit and loss account? a. 8240 b. 4240 c. 5200 d. 1200

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How many units were taken delivery by consignee? a. 920 b. 980 c. 900 d. None of the above Consignees expenses of freight shall be applied on a. 1000 units b. 900 units c. 980 units d. 960 What is the value of closing stock? a. 20000 b. 22400 c. 22960 d. 22368

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d. Cost of damaged item was Rs.5200. Insurance company paid Rs.4000. The balancing figure of Rs.1200 shall be transferred to Profit and loss account d. None of the above. Though the consigned goods were damaged, consignee took delivery for the entire 1000 boxes. c. Though 1000 boxes were taken delivery, only 980 boxes for which care would be given for safe delivery b. Refer working notes

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