GNDU B.Com (Bachelor of Commerce)

Chapter 6: Consignment, Voyage and Departmental Accounts

Summary

This unit covers three specialised accounting situations. Consignment accounting deals with the despatch of goods by a consignor (owner) to a consignee (agent) for sale on commission, where ownership does not pass to the consignee. The consignee sells the goods, deducts an agreed commission (ordinary, del-credere for bearing bad-debt risk, or over-riding) and remits the balance, sending an account sales that details quantities sold, expenses, advances and the amount due. The consignor records consignment expenses, the consignee's expenses and commission, and values unsold stock at cost plus proportionate non-recurring expenses; consignment differs from a joint venture because in consignment there is a principal-agent relationship rather than co-ownership of a single venture. Voyage accounting applies to shipping, recording the revenues (freight, passage money) and expenses (port charges, stores, insurance, depreciation) of a particular voyage to find its profit; for an incomplete voyage at year-end, revenue and certain expenses are apportioned and stores and insurance are carried forward. Departmental accounting prepares separate trading results for each department of one business to judge their relative performance; common expenses are allocated or apportioned on a suitable basis, inter-departmental transfers are recorded at cost or at a transfer price, and a provision for unrealised profit is created on closing stock that contains internal profit.

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Practice quiz