CMA Intermediate · Financial Accounting · Consignment
In a consignment arrangement, who owns the goods while they are held by the consignee, unsold?
The consignor remains the owner of the goods until the consignee sells them to a third party. The consignee is only an agent and bailee, so title does not pass on dispatch or on payment of an advance by the consignee.
- AThe consignor, until the goods are sold to a third partyCorrect
- BThe consignee, from the moment of dispatch
- CThe consignee, once he pays the advance
- DThe customer, from the date the order is booked
Explanation
A consignment is a bailment: the consignee only holds and sells the goods as an agent. Ownership and risk stay with the consignor until sale to a third party. Payment of an advance by the consignee does not transfer title, so that option is wrong.
Did you get it right without looking?
One question tells you little. A timed set on Consignment shows your real accuracy, how long you take and where you lose marks.
More Consignment questions
- Which statement about the Proforma Invoice sent by the consignor to the consignee is correct?
- Verma Industries consigned goods invoiced at 25% above cost. The goods sent were Rs 3,75,000 at invoice price. What was the cost of the good…
- Mehra Ltd. consigned 200 units costing Rs 500 each to Nair & Co., and paid Rs 10,000 freight. Nair sold 150 units at Rs 700 each, and paid R…
- Kapoor Ltd. consigned 500 units costing Rs 200 each to Sen Brothers. The consignor paid Rs 10,000 freight and insurance. On the way, 50 unit…
- Singh Ltd. consigned 400 units costing Rs 100 each to Das & Co., paying Rs 8,000 as freight. In transit, 40 units were destroyed by fire (ab…
- Gupta & Sons consigned 600 units at Rs 100 each, and Rs 6,000 of expenses were incurred up to the consignee's godown. The consignee then inc…