Skip to content

CMA Intermediate · Financial Accounting · Consignment

Which statement about the Proforma Invoice sent by the consignor to the consignee is correct?

A proforma invoice merely lists the goods sent, their quantity and the terms, and is not a sales invoice. No sale arises on dispatch, so the consignor records goods sent on consignment instead, and the consignee makes no purchase entry.

  1. AIt is a statement of the goods sent and is not a sales invoice, so no sale is recorded by the consignorCorrect
  2. BIt is a sales invoice, so the consignor records a credit sale to the consignee
  3. CIt transfers ownership of the goods to the consignee
  4. DIt must be recorded as a purchase in the consignee's books

Explanation

A proforma invoice only gives particulars of the goods consigned, such as quantity, price and terms. It is not a sale document, so the consignor debits the Consignment account and credits Goods Sent on Consignment, and the consignee makes no purchase entry.

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