Question

Which of the following statement is wrong:

• A. Consignor is the owner of the consignment stock
• B. Del-credere commission is allowed by consignor to protect himself from bad debt.
• C. Proportionate consignor's expenses is added up with consignment stock.
• D. All proportionate consignee's expenses will be added up for valuation of consignment stock.

Answer 1

The correct option is D All proportionate consignee's expenses will be added up for valuation of consignment stock.

• Consignor is the owner of the consignment stock. The consignee is a mere agent who sells goods sent on consignment on behalf of the consignor.
• Del-credere commission is allowed by the consignor to protect himself from bad debt. The consignee is liable to receive this commission when he takes responsibility of bad debts may occur.
• Proportionate consignor's expenses are added up with the consignment stock to arrive at the correct cost of goods sent on consignment.
• All proportionate consignee's expenses will not be added up for valuation of consignment stock. Only those expenses incurred by consignee will be added up proportionately which have been incurred by the consignee on behalf of the consignor on account of consignment.