wiz-icon
MyQuestionIcon
MyQuestionIcon
1
You visited us 1 times! Enjoying our articles? Unlock Full Access!
Question

Consignment stock will be recorded in the balance sheet of Consignor on asset side at _____________.

A
Invoice value
No worries! We‘ve got your back. Try BYJU‘S free classes today!
B
Invoice value less stock reserve
Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses
C
Lower than cost price
No worries! We‘ve got your back. Try BYJU‘S free classes today!
D
10% lower than invoice value
No worries! We‘ve got your back. Try BYJU‘S free classes today!
Open in App
Solution

The correct option is A Invoice value less stock reserve
Consignment stock is an asset that belongs to the consignor and hence, shown on the asset side of the balance sheet of the consignor, prepared at the end of a period. The consignment stock which remains unsold in the hands of the consignee will be shown as an asset in the balance sheet at invoice value less stock reserve. Invoice value is the value at which the consignor supplies such stock to the consignee by adding his share of profit to the cost in the proforma invoice. The consignor directs the consignee to sell such stock at the given invoice value without revealing his profit margin. So, when the goods remain unsold, the consignor records them as stock in the asset side of the balance sheet by reducing the invoice value by profit margin or the stock reserve.

flag
Suggest Corrections
thumbs-up
0
Join BYJU'S Learning Program
similar_icon
Related Videos
thumbnail
lock
Common Size Financial Statement
ACCOUNTANCY
Watch in App
Join BYJU'S Learning Program
CrossIcon