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Consignment Account Interview Questions & Answers - Learning Mode
COOLINTERVIEW.COM FINANCIAL ACCOUNT INTERVIEW QUESTIONS CONSIGNMENT ACCOUNT INTERVIEW QUESTIONS QUESTIONS & ANSWERS - LEARNING MODE

Consignment Account Interview Questions & Answers - Learning Mode

Consignment occurs when goods are sent by their owner (the consignor) to an agent (the consignee), who undertakes to sell the goods. The consignor continues to own the goods until they are sold, so the goods appear as inventory in the accounting records of the consignor, not the consignee.

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Consignment Account Interview Questions & Answers - Learning Mode
Try Consignment Account Interview Questions & Answers - Exam Mode
Question: What is the accounting treatment for normal loss?

Answer: The cost of normal loss is considered as part of the cost of production in which it occurs. If normal loss units have any realisable scrap value, the process account is credited by that amount. If there is no abnormal gain, then there is no necessity to maintain a separate account for normal loss. Source: CoolInterview.com
Question: When is Stock Consignment Account opened?

Answer: Some concerns prefer not to mix cost of goods sent on consignment, sales and expenses in the same account. In such a case, an account, called Consignment Stock Account is opened and debited by the cost of opening stock in the hands of the consignee and the cost of goods sent.
Source: CoolInterview.com
Question: Give the journal entry in the books of consignor for valuation of stock.

Answer: Stock On Consignment A/C Dr xxx
To Consignment A/C xxx Source: CoolInterview.com
Question: Give the journal entry in the books of consignor for commission payable to the consignee.

Answer: Consignment A/C Dr xxx
To Consignee's Personal A/C xxx Source: CoolInterview.com
Question: Give the journal entry in the books of consignor for expenses incurred by the consignee.

Answer: Consignment A/C Dr xxx
To Consignee's Personal A/C xxx Source: CoolInterview.com
Question: How is abnormal gain calculated?

Answer: Abnormal Gain= Actual Production-Expected Production. Source: CoolInterview.com
Question: What is the difference between Consignment and Sales?

Answer: a) When the goods are delivered to the agent by the owner for selling purposes is known as consignment whereas a transaction in which goods are exchanged for a price is known as a sale.
b) The Parties involved in consignment are Consignor and consignee sharing the relationship of a principal and agent whereas the parties involved in sale are seller and buyer sharing the relationship of a creditor and debtor. Source: CoolInterview.com
Question: Who is a consignee?

Answer: In a contract of carriage, the consignee is the entity who is financially responsible ( the buyer) for the receipt of a shipment. Generally, but not always,the consignee is same as the receiver.
Source: CoolInterview.com
Question: What is abnormal gain?

Answer: If the actual loss of a process is less than that of expected loss then the difference between the two will be treated as abnormal gain.
Source: CoolInterview.com
Question: Give the journal entry in the books of consignee on commission being earned.

Answer: Consignor's Personal A/C Dr xxx
To Commission A/C xxx Source: CoolInterview.com
Question: What is normal loss?

Answer: Normal loss means that loss which is inherent in the processing operations. It can be expected or anticipated in advance i.e. at the time of estimation.
Source: CoolInterview.com
Question: How to calculate value of unsold stock?

Answer: Value of unsold stock= Cost Price of Closing Stock+ Proportionate non- Recurring Expenses
Source: CoolInterview.com
Question: Who is a consignor?

Answer: Person or firm ( usually the seller) who delivers a consignment to a carrier for transporting it to a consignee ( usually the buyer) named in the transportation documents. Ownership ( title) of the goods remains with the consignor until the consignee pays for them in full.
Source: CoolInterview.com
Question: Explain the three accounts maintained by consignor.

Answer: a) Consignment Account: It is a nominal account. It is in fact a Special Trading and Profit and Loss Account. The balance, in this account, represents either profit or loss on consignment which is finally transferred to General Profit and Loss Account.
b) Consignee's Personal Account: It is a personal account. It is mainly prepared to ascertain the amount due from the consignee.
c) Goods Sent On Consignment Account: it is a real account. It is closed by transferring its balance to Pur Source: CoolInterview.com
Question: Give the journal entry in the books of consignee on commission being earned.

Answer: Consignor's Personal A/C Dr xxx
To Commission A/C xxx
Source: CoolInterview.com
Question: What is the accounting treatment for abnormal loss?

Answer: Process account is to be credited by abnormal loss account with cost of material, labor and overhead equivalent to good units and the loss due to abnormal is transferred to costing Profit and Loss account.
Source: CoolInterview.com
Question: Give the journal entry when consignment is partly sold.

Answer: Stock on Consignment A/C Dr xxx
To Consignment A/C xxx Source: CoolInterview.com
Question: What do you mean by valuation of unsold stock in accounting for consignment of goods?

Answer: The stock lying in the hands of consignee at the end of accounting year is valued at cost or market price whichever is less. The cost of unsold stock or closing stock should be valued at cost to the consignor plus proportionate non- reccuring expenses incurred by the consignor and consignee. Source: CoolInterview.com
Question: Give the journal entry in the books of consignor on the consignee accepting a bill of exchange.

Answer: Bills Receivable A/C Dr xxx
To consignee's Personal A/C xxx Source: CoolInterview.com
Question: Give the journal entry in the books of consignee on sales being affected.

Answer: Cash ( or Bank) A/C Dr xxx
To Consignor's Personal A/C xxx Source: CoolInterview.com

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