Account Sales - Consignment Accounting/Accounts

What is Account Sales?

An account sales is a statement of affairs, relating to the consignment, prepared periodically by the consignee, and sent to the consignor.

The details in the account sales form a basis for the consignor, to account for the transactions that take place at the consignees end.

Need for Account Sales

Answers to the following questions would provide an understanding on the need for Account Sales.

Duration of the relationship

The relationship between the consignor and the consignee is an ongoing relationship and would continue till they wish to, with modifications in their agreement as and when they wish to.

Where do the transactions take place?

The transactions relating to the consignment business take place at the place of the consignor as well as that of the consignee.

Transactions relating to sending goods, loading charges, transportation cost, transit insurance etc., take place at the consignors place.

Transactions relating to unloading received goods, carrying costs, selling cost, delivery charges, etc. as well as transactions relating to collection of credit sale dues, bad debts, commissions to consignee etc., occur at the place at the consignees.

Who needs all the information on Consignment

The consignor is the risk bearer of the business.

To ascertain the profitability of the business, the consignor needs to account for all the transactions relating to the business, the ones that take place at his end as well as the ones that take place at the consignees place.

The consignor also needs to have the complete information relating to the business, to be able to take decisions relating to many key aspects of the business.

The consignee being just an agent, would not be interested in the total information of the business. He would be interested only in those transactions where he has to either receive or give the consignor. Therefore he would not be bothered about many of the transactions that take place at the consignors place.

How does the Consignor know about the Transactions at the Consignees place?

The consignor needs to know what is happening at the other end. The consignee also needs to know some information from the consignor.

The information can be arranged to be passed on from the consignee to the consignor and vice versa at a frequency that would be convenient to both. It may not be practical to think in terms of letting the other know immediately on a transaction taking place at one end.

The transactions taking place at the consignors place have very little accounting relevance to the consignee. But the transactions taking place at the consignees place are very important from the accounting point of view to the consignor. Therefore a system has been designed to provide for transfer of this information from the "Consignee to the Consignor" at a frequency agreed upon between them. This information is passed on by the consignee to the consignor in the form of a statement called "Account Sales".

Account Sales - Format and Content

Accounts sales is a statement. It has a heading indicating the period relevant to the data in the statement.

There may be other details relating to the consignor and the consignee in the heading.

Account Sales
from Maruthi Traders (Metro)
for the period from ____ to _____
Particulars Amount Amount Amount
Cash Sales

Credit Sales

xxx xxx
Other Receipts [*1]

xxx xxx
Gross Proceeds
(−) Bad Debts [*2]
Net Proceeds
(−) Deductions
Advances/Remittances [*3]


Expenses Reimbursable [*4]


Commission on Sales [*5]


Total Due [*6] xxx
(−) Uncollected [*6] xx
Collected Due xxxx
(−) Being sent xxxx
Pending Due [*6] xxx


  1. Other Receipts

    Apart from the sale proceeds, the consignee may be collecting amounts on behalf of the consignment or the consignor like sale proceeds of salvaged stocks in case of abnormal losses, insurance realisations, etc.

    These realisations or collections would not form revenue for consignment business. They would not be included in the sale proceeds.

    Cash Sales
    + Credit Sales
    Total Sales
    + Insurance realised
    Gross Proceeds

    Since the consignee has to account for these realisations also he includes them in the account sales.

  2. Bad Debts

    Where the consignee is not in receipt of del credere commission or where the consignor and the consignee have agreed to that affect, the consignment bad debts would have to be borne by the consignor.

    Gross Sale Proceeds includes all credit sales made.

    Since bad debts are unrealisable sale proceeds, they have to be deducted from the total receipts, to arrive at the actual amount that is realisable and sent to the consignor.

    Gross Proceeds
    − Bad Debts
    Net Proceeds

    The bad debts considered for such a deduction do not include the ones that are to be borne by the consignee.

  3. Advances/Remittances

    The consignee may have remitted to the consignee either as an advance or otherwise amounts after the last account sales has been sent.

    Such remittances may have been made by sending cash, cheques, Bills, or Assets or by accepting Bills Payable or Liabilities of the consignor.

    All these go into reducing the amount that is due from the consignee to the consignor.

    Net Proceeds
    − Deductions
    Expenses Reimbursable
    Total Due


  4. Expenses Reimbursable

    The consignee may have incurred expenses in relation to the consigned goods. These expenses will have to be reimbursed by the consignor.

    The consignee deducts such expenses that he is entitled to be reimbursed, from the sale realisations.

    These do not include the expenses that the consignee has agreed to bear.

  5. Commissions Receivable

    The consignee would deduct all commission he is entitled to from the sale proceeds and remit only the balance to the consignor.

    The consignee may be entitled to one or more types of commissions, calculation of each of which is dependent on the consignment agreement.

  6. Dues

    By dues we mean the amounts that the consignee has to send the consignor.


    The consignee would first deduct all his entitlements and reimbursements from the net realisations and send the remaining to the consignor.

    This amount that the consignor is entitled to receive would form the total due.


    The total due includes amounts relating to both cash and credit sales. The consignee can send cash relating to credit sales only if it is collected.

    Thus to arrive at the amount that has to be be sent to the consignor, the uncollected dues are deducated from the total dues.

    The uncollected dues is the aggregate of the balances in the Consignment Debtors accounts.


    The consignee would be obliged to pay up the collected due to the consignor. If he sends only a part of it, the remaining can be identified as Pending dues.

    Pending dues would be the Consignor a/c balance in the Consignee books.

Problem Solving

Preparing account sales from the problem data would make the problem solving task easier. Its preparation is an implied requisite in most of the problems.