Learning Materials For Accounting, Management , Finance And Economics.

Tuesday, October 4, 2011

Difference Between Consignment And Sales

Consignment can not be treated as sales of goods. It is different from sales. The difference between consignment and sales are as follows:

1. Ownership

Consignment: The ownership of the goods remains with the consignor until sales is effected by the consignee.
Sales: The ownership of the goods immediately transferred to the buyer when sale is effected.

2. Relationship

Consignment: The relationship between the consignor and consignee are of principal and agent. Their relation ship are continued till terminated.
Sales: The relationship between the two parties are that of seller and buyer and they terminated as soon as payment is made and goods are delivered.

3. Expenses

Consignment: The expenses incurred by the consignee to execute sale and the expenses incurred by consignor to send the goods to the consignee, both are borne by the consignor.
Sales: Any expenses incurred after the sale is not borne by the seller.

4. Risk

Consignment: The risk of goods under consignment is always with the consignor.
Sales: When the sale is made the risk is transferred to the buyer.

5. Return Of Goods

Consignment: Consignee can return goods to the consignor since those are properties of consignor.
Sales: A buyer can not return goods unless the goods are found defective or damaged or the seller agrees to.

6. Statement

Consignment: For giving details about the goods sold and expenses incurred by him, consignee sends the account sales to consignor.
Sales: The buyer need not submit any account sales to the seller

7. Stock

Consignment: The unsold stock with the consignee will be treated as a stock of the consignor.
Sales: In case of sale, the buyer's unsold stock do not attract the seller.

8. Commission

Consignment: Commission is the main consideration of consignment. The consignee performs the selling activity only for commission.
Sales: Profit is the main consideration of sales.