What is the correct
Consignment stock
Answers
Ownership is still with the consignor and still recorded in its books as inventory. Once consumed...considered/recorded sold. Treat like any inventory that is stored elsewhere. If you want to separate it from regular inventory, you can create a separate GL inventory classification. A process should also be in place to trigger recording as "consumed/sold". Needless to say, periodic inventory count is important. Most also forget to provide insurance for the value of the consigned goods.
Anon
Adding to Emerson's advice, look at the entire business process, from the time the order is received to ship product to how the consumption is reported back for prompt billing and how inventory shortages are managed.Does the business process flow the right way into accounting?
Filed Under:
Accounting