Skip to content

CMA Intermediate · Financial Accounting · Consignment

In the books of a consignor, which of the following correctly describes the Consignment Account?

The Consignment Account is a nominal account. It records goods sent, expenses, commission and sales, and its balance is the profit or loss on consignment, which is transferred to the Profit and Loss Account. The amount owed by the consignee is kept in a separate personal account.

  1. AA nominal account that is closed to the Profit and Loss Account when the consignment is completeCorrect
  2. BA personal account of the consignee showing the amount he owes
  3. CA real account showing the stock lying with the consignee at cost
  4. DA liability account that shows advances received from the consignee

Explanation

The Consignment Account is a nominal account in the consignor's books. It collects goods sent, expenses and the consignee's commission against sales, and its balance is the profit or loss on consignment, transferred to the Profit and Loss Account. Option B describes the consignee's personal account, not this one.

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.

Practise ConsignmentFree diagnostic mock

More Consignment questions