ACCOUNTING RECORDS
A proper record of all transactions relating to a particular consignment is necessary for ascertaining Net Profit or Net Loss on each separate consignment. To attain this objective the consignor usually maintains three accounts:
(1) Consignment Account.
(2) Consignee’s Account
(3) Goods Sent On Consignment Account.
Consignment Account is a Nominal Account. It is in fact a special Trading and Profit & Loss Account and, therefore, its balance shows the Profit or Loss made on a garticular consignment Consignee’s Account is a Personal Account and, therefore, in case the Consignee has not remitted the balance due by him in full, he will be a debtor, whereas it he has remitted more than the balance due by him, he will be a creditor.
Goods sent on Consignment Account is a Real Account. It is closed up by transferring its balance to Purchases Account (sometimes it is also transferred to the credit side of Trading Account).
The above accounts are maintained in respect of each of the consignments. For example, if goods have’been sent on Consignment to Bombay, Calcutta and Madras, Consignment Account, Consignee’s Account and Goods sent on Consignment Account will be maintained in respect of each of these consignments.
Leave a Reply