Also see consigned goods.
Consignment accounting is a type of business arrangement in which one person send goods to another person for sale on his behalf and the person who sends goods is called consignor and another person who receives the goods is called consignee, where consignee sells the goods on behalf of consignor on consideration of certain percentage on sale. When the goods are eventually sold, the consignee retains a commission and pays the consignor the residual amount. A consignment occurs when the owner of goods leaves them with another party to be sold.
Accounting for Consignment - Due to increasing size of market, it is quite obvious that manufacturers or whole sellers cannot approach directly to every customer around the state or nation.
The word meaning consignment in accounting can be generally defined as the act of sending a quantity of goods by the manufacturers and producers of one country or place to their agents in another at the risk of the principals for the purpose of sale. Sending merchandise to another party (an agent, consignee) in order to sell the merchandise.