Distinction/Difference Between Consignment and Sale:
What is the distinction/difference between consignment and sale?
The following are the main points of the difference between consignment and sale.
Transfer of Legal Ownership of the Goods:
In case of sale, the legal ownership of the goods sold is transferred to the purchaser of goods. Whereas in case of a consignment of goods , the legal ownership of the goods is not transferred to the consignment but the ownership of the goods remains vested in the consignor till the goods consigned are sold by the consignee.
Relationship Between Consignor and Consignee:
In case of a sale of goods, the relationship between the seller and the purchaser of the goods is that of a creditor and a debtor whereas in case of a consignment the relationship between the consignor and the consignee is that of a principal and agent. because the consignee is to sell goods on behalf of the consignor.
In consignment, expenses incurred by the consignee in connection with the goods consigned to him are usually borne by the consignor whereas in case of a sale, expenses incurred after sale of goods are born by the purchaser.
Risk Attached to the Goods:
In case of consignment, risk attached to the goods sold lies with the consignor till the goods consigned are sold by the consignee. But in case of a sale, risk attached to the goods sold is transferred to the buyer of goods.
Return of Goods:
In case of consignment, return of goods is possible if the goods are not sold by the consignee. But in case of sale, return of goods is not possible as goods once sold are not returnable.
Requirement of Account Sale:
In case of consignment, account sale is required to be submitted periodically by the consignee to the consignor. But in case of sales no account sale is required to be submitted by the purchaser to the seller.
You may also be interested in other articles from “accounting for consignment” chapter:
- Definition and Explanation of Consignment
- Distinction/Difference Between Consignment and Sale
- Definitions of Important Terms Used in Consignment Accounting
- Consignment Accounting Journal Entries
- Valuation of Unsold Stock Or Closing Stock in Consignment Accounting
- Valuation and Treatment of Normal and Abnormal Loss in Consignment Accounting
- Invoicing Goods Higher Than Cost in Consignment
- Consignment Accounting Problems, Exercises and Questions
- Consignment Accounting Questions and Answers
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