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CMA Foundation · Fundamentals of Financial and Cost Accounting · Consignment

Which of the following expenses incurred by the consignee is NOT included in valuing unsold stock on consignment?

Godown rent for the selling period is excluded from stock valuation. It is a recurring expense, charged wholly to the consignment account. Octroi, unloading and carriage on arrival are non-recurring costs necessary to bring goods to saleable condition, so they are included in the cost of unsold stock.

  1. AOctroi duty paid on receipt of goods
  2. BUnloading charges on arrival at the godown
  3. CCarriage paid to bring goods to the godown
  4. DGodown rent for storing goods during the selling periodCorrect

Explanation

Expenses incurred up to the point goods reach the consignee's godown in saleable condition are non-recurring and add to the cost of stock. Godown rent for the selling period is a recurring expense and is charged to the consignment account, but not included in stock valuation.

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