Prepare a consignment account,
consignee account and account sales.
Explain advantages and disadvantages of
sending goods on consignment.
Distinguish between goods consigned and
In today's world of business, every
manufacturer, exporter or wholesaler tries
his best to sell his products in his own
country and abroad to a larger extent. But
it is not an easy task, because a
businessman cannot have the exact
information about the demand of his product
in different parts of the country and
abroad. There are two methods by which
businessmen can increase the sale of their
products. These methods are:
Opening branches in different parts
of the country and abroad.
Appointing agents in their own
country as well as abroad.
The first method is very extensive
because a large sum of money is needed to
establish a branch and a number of persons
are required as manager, clerks, accountant
etc. to carry out different operations of
the branch. In spite of spending such a
heavy amount, the branch may prove
unsuccessful or the profit earned by the
branch may be very small as compare to the
amount invested in the branch.
So far as the second method is concerned,
the manufacturer or wholesaler just appoints
an agent who sells goods on behalf and on
the risk of the manufacturer or wholesaler.
The agent is paid commission which is
generally a percentage of sales made by him.
The agent tries to sell the goods in the
best possible manner and remits the sale
proceeds of the goods after deducting
expenses and his own commission to the
manufacturer or wholesaler. This is
comparatively a low cost method of promoting
sales in different parts of the country and
abroad. This method is generally known as "sending
goods on consignment basis".
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