CPT Chapter Consignment

CA CPT chapter on “Consignment” explains the terms of consignment, consignee and consignor and the difference between a sale and a consignment. It explains how profit or loss on consignment is computed by preparing a Consignment Account. It explains the valuation of Consignment Stock and Abnormal Loss and the accounting treatment of Normal Loss.

CA CPT Exam  

With Sheela Warrier.Duration:4hrs 36min

ConsignmentDuration (min:sec)
What is  Consignment? 
Concept- What is Consignment06:22
Sale Vs. Consignment03:54
Procedure & Related Terms21:49
Example Commission07:58
Consignment Accounting 
How to ascertain Profit04:26
Nature of Consignment Account03:08
Accounting Entry Books of Consignor20:40
Valuation of Consignment stock05:19
Accounting Entry Books of Consignee09:18
Del credere Commission09:08
Summary of Accounting Entry04:18
Consignment Related Topics 
Abnormal Loss10:13
Examples Abnormal Loss14:47
Normal Loss04:22
Examples normal Loss08:13
Invoicing at higher Price05:11
Examples of Invoicing at higher price10:06
Advance in consignment07:16
Security against consignment04:54
Final Quiz29:16
Additional Questions9:56


Few things covered by us

What is a Consignment?
Distinction between Sale and Consignment
Procedure & related terms
Preparing Consignment Account
Valuation of Consignment Inventories
Accounting entries in the books of the Consignee
Normal and Abnormal Loss
Treatment of goods invoiced above cost
Security against the Consignment

What is Consignment

Consignor sends goods to Consignee
For Sale on behalf of Consignor
No transfer of ownership or risk
Relationship of a principal and agent
Payment in the form of Commission
Reimbursement of consignee’s expenses


Proforma Invoice
Consignor’s expenses
Consignee expenses
Advance by consignee
Return of goods by consignee

Consignment - Related Terms

Ordinary Commission
Del Credere Commission
Overriding Commission
Account Sales
Unsold inventory

Abnormal Loss

Abnormal Loss a/c Dr
To Consignment a/c

Insurance claim Dr
To Abnormal Loss

Profit and Loss a/c Dr
To Abnormal Loss

Normal Loss

Natural, unavoidable, inherent
No separate entry
Total cost spread over good units

Invoicing at a higher price

Actual cost of the goods is not revealed
Advice to agent to not sell below the invoice price
Accounting entries at invoice price
Additional entries for removing loading


Paid by consignee on or before receipt of consignment.
Adjusted in full when balance remittance is made to consignor.
Closing consignment stock with consignee but no advance

Security against consignment

Paid by consignee on or before receipt of consignment.
Adjusted in part when balance remittance is made to consignor.
Advance with consignor equal to proportion of closing consignment stock.

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