CPT

Consignment

1 Consignment would involve: c. Transfer of goods

a. Sale of goods between principal and agent to consignee to be
b. Partnership business between parties sold on behalf of
c. Transfer of goods to agent by principal. consignor.
d. Accommodation of bill
2. Goods sent on consignment are recorded at b. Invoice price.
a. Cost price Document
b. Invoice price accompanying the
c. Selling price goods are normally
d. Catalogue price sent at invoice price.
3. Loading on goods sent on consignment is the c. Difference between
difference between: invoice price and cost
a. Selling price and cost price price is termed as
b. Invoice price and selling price loading
c. Invoice price and cost price
d. Credit price and cash price
4. Majority of non-recurring expenses are normally a. Consignor is the
incurred by initiator incurs
a. Consignor majority of the non
b. Customer recurring expenses.
c. Carrier
d. Consignee
5. Consignee is entitled for c. commission is the
a. Salary source of income for
b. Expenses consignee.
c. Commission on sales
d. Profit
6. Consignee is a. Agency principal
a. Agent of consignor b. relationship is
Partner of consignor c. prevailing.
Principal of consignor
d. Employee of consignor
7. Consignee can claim d. He is entitled for
a. For expenses on consignment the commission and
b. For commission on sales effected expenses on
c. Either a or b consignment
d. Both a & b
8. Goods lost in transit shall be accounted only at a. Cost price is the
a. Cost price (including expenses) base at which goods
b. Invoice price (including expenses) lost in transit shall be
c. Selling price (excluding expenses) accounted.
d. Net realizable value
9. To make consignee sell the goods sent on d. Demanding
consignment, consignor shall advance money
a. Fix higher rate of commission means consignee
b. Fix del credere commission though not taking
c. Allow consignee to participate in profits risk, effectively
d. Demand advance money in cash or Bills investing
money/moneys
worth. This will result
in he taking all
possible steps to sell
10. Loading is required for d. All the items
a. Goods sent on consignment referred shall qualify
b. Closing stock lying at consignee’s place for removal of load.
c. Goods returned by consignee
d. All of the above
11. Non-recurring expenses incurred by consignor are b. All units sent by
loaded on consignor irrespective
a. All units sold by consignee of their ultimate
b. All units sent by consignor disposition.
c. All units unsold by consignee
d. All units sent except damaged/lost
12 Del credere commission is calculated on d. Total sales
a. Total sales effected by consignee effected by consignee
b. Credit sales effected by consignee as reduced by returns
c. Cash sales effected by consignee if any.
d. Total sales – Sales returns effected by c’nee
13 Over riding commission is the commission on c. For extra efforts
a. Additional commission on cash sales put in by the
b. Additional commission on credit sales consignee, an award
c. Extra revenue over normal sales
d. None of the above
14 NRV of the unsold stock is arrived at by c. Net realizable
a. Multiplying the selling price and the unsold value is the
stock difference between
b. Calculating the future commission payable normal sale value
c. a-b and the expenses to
d. a+b be incurred to realize
the sale value.
15. Consignment account is a. Nominal account.
a. Nominal account Prepared to find out
b. Real account profit/loss on
c. Personal account consignment
d. Memorandum account
16. Goods sent on consignment account is a b. Real account. This
a. Personal account reflects the stock
b. Real account sent out of normal
c. Nominal account business for
d. Impersonal account consignment
purposes
17 Consignee’s personal account is prepared to find b. To find the
out outstanding position
a. Profit or loss on consignment account with consignee
b. Sums due to or due from consignee
c. Commission payable to consignee
d. Appropriation of profit with consignee
18. Insurance claim against abnormal loss account b. Profit and loss
shall be transferred to account to which the
a. Consignment account difference between
b. Profit and loss account the cost and the
c. Goods sent on consignment account claim will be
d. Consignee’s personal account transferred.
19. Consignee records all except d. Consignee records
a. Recurring expenses incurred by consignee all transactions
b. Non recurring expenses incurred by pertaining to him
consignee except the closing
c. Commission eligible for sales stock held by
d. Unsold stock held by consignee consignee
20. The document sent detailing the sales effected, c. Account sales is
unsold stock, expenses incurred by consignee is the name of the
a. Pro-forma invoice document sent by
b. Current account consignee periodically
c. Account sales
d. Sales account
21. Bad debts incurred by consignee, so he will not c. Del credere
transfer the burden to consignor when he is paid commission is paid by
a. Commission consignor to absorb
b. Over riding commission the risk of bad debts.
c. Del credere commission
d. Commission on profit
22. The balancing figure in goods sent on a. Purchases or
consignment account of a trader consignor is to trading account
be transferred to
a. Purchases or trading account
b. Manufacturing account
c. Profit and loss account
d. Retained as closing stock
23. The following are part of non-recurring expenses: d. As part of the non-
a. Freight recurring expenses all
b. Insurance expenses incurred
c. Cartage specifically for the
d. All the above consignment shall be
taken for stock
valuation purposes.
24. Goods loss in transit cannot be recovered from a. It is incorrect. Del
the insurance company as consignee had taken credere commission
del credere commission: Is it correct? and claim on account
a. Incorrect of goods lost in
b. Correct transit have no
c. Sometimes correct connection at all.
d. None of the above
25. When goods are sent on consignment, c. Goods sent on
consignment account shall be debited and credit consignment account
shall be offered to shall be credited for
a. Consignee’s account the movement of
b. Purchases account material
c. Goods sent on consignment account
d. Capital account of consignor
26. While recording the transaction in the form of a. True. In either
journal entry, there is no difference between cash case, consignee’s
sales and credit sales in the books of consignor. account will be
a. True debited with
b. False corresponding credit
c. Not relevant to consignment
d. Partly true account.
27. Removal of loading on opening stock shall be b. False. Since
debited to consignment account. opening stock
a. True appears on the debit
b. False side, loading is to be
c. Not relevant carried out on the
d. Partly true credit side.
28. Removal of loading on closing stock shall be a. It is true. As the
debited to consignment account. closing stock appears
a. True on the credit side of
b. False consignment account,
c. Not relevant removal of load is to
d. Partly true be shown on debit.
29. Freight expenses incurred by the consignee for b. Incorrect. Such
returning goods to consignor shall be added as freight expenses have
non-recurring expenses for valuing closing stock. no connection to the
a. Correct unsold stock.
b. Incorrect
c. Partially correct
d. None of the above
30. In case consignee participates in the profit, b. It is correct for
expenses incurred in the return of unsuitable consignee’s
goods to consignor shall not be considered in the entitlement of profit
computation of profit entitlement share. Cost of
a. It is correct for consignment returning goods is
b. It is correct for consignee purely the cost of
c. It is incorrect for consignor faculty/unsuitable
d. It is incorrect in accounting item sent by
consignor not to be
burdened for
consignee’s profit
share
31. In case consignee participates in the profit, d. Expenses incurred
expenses incurred in the return of unsuitable in consignment can
goods to consignor shall not be considered in the never be ignored
computation of profit on consignment whatsoever. It is bad
a. It is correct for consignment in accounting.
b. It is correct for consignee
c. It is incorrect for consignor
d. It is incorrect in accounting
32 Irrecoverable debts in consignee’s books shall be c. Consignors account
a. Debited to bad debts account shall be debited in
b. Debited to Profit & Loss account case of non-recovery
c. Debited to consignor’s account of debts when no del
d. Debited to Provision for bad and doubtful credere commission
debts account is paid.
33 Irrecoverable debts in consignee’s books shall be d. Consignors
a. Debited to consignor’s account account in case no
b. Debited to del credere commission account del credere
c. Debited to bad debts account commission is taken
d. Either a or b or else del credere
account
34 Treatment for normal loss in the valuation of a. Ignore it in the
closing stock is computation of
a. Ignore it closing stock value.
b. Insure it However
c. Include it quantitatively the
d. Inflate it same shall be
deducted
35 Abnormal loss is d. Abnormal loss
a. Excessive loss takes into account all
b. Accidental loss these issues
c. Damage resulting into obsolete
d. All of the above
36 When the details of expenses met out by c. Consider all
consignee is not provided, for valuation of stock expenses of
purposes consignor as non-
a. Consider all expenses of consignee recurring in nature.
b. Ignore all expenses of consignor
c. Consider all expenses of consignor
d. Ignore all expenses of both
37 Provide for commission for unsold stock in the b. Ignore it as there
books of consignor on the lines of principle of is no obligation
conservatism whatsoever for the
a. Recommended practice unsold stock.
b. Ignore it as the sale had not taken place Payment of
c. Consider it as consignee will sell in the commission will arise
future only when sale is
d. Consider even the sale also in any case over.
goods will be sold in the future

38 Goods are sent at invoice price because b. As a matter of

a. Consignor wanted to preserve the secret of statutory requirement
margin from consignee. to satisfy authorities
b. As a matter of statutory requirement to when checking takes
accompany a document along with the place at check posts
consignment at probable selling price. in the border of
c. Indicate the likely commission payable to states when
consignee consignment moves.
d. To value the closing stock at invoice price.
39 Goods lost at consignee’s place shall be claimed a. Consignor is the
only by owner of the stock
a. Consignor having insurable
b. Consignee interest shall claim in
c. Insurance company the event of loss
d. Godown owner wherever.
40 Consignment business has d. all the principles
a. Going concern concept and concepts are
b. Conservatism principle present through out
c. Dual aspect concept in consignment
d. All the above
41 The following statement is not false c. Unsold stock is
a. Consignment and sale are same valued lower of cost
b. Consignor and consignee are partners or NRV
c. Unsold stock is valued lower of cost or NRV
d. Consignment is like sale or return
42 The following statement is not true b. Stock is to be
a. Stock is valued at lower of cost or NRV valued at purchase
b. Stock is to valued at purchase cost plus cost and pro-
recurring expenses of consignee porationate non-
c. Del credere commission is calculated on recurring expenses of
total sales both consignor and
d. Consignment account is nominal account consignee.
43 Non-recurring expenses/non-selling expenses b. True. Expenses
incurred by consignee is taken in the computation incurred by consignee
of Abnormal loss reported at consignee’s godown shall be considered
a. False for accidental loss
b. True reported at
c. Partly true consignee’s place
d. Neither true nor false
44 Non-recurring expenses/non-selling expenses a. False. Expenses of
incurred by consignee is taken in the computation consignee are
of Abnormal loss reported on transit incurred after the
a. False report of loss. Hence
b. True not to be taken
c. Partly true
d. Neither true nor false
45 Abnormal loss is treated like closing stock; a. For cost
therefore ascertainment
a. It should be valued only at cost purposes it should be
b. It should be valued at NRV treated just like
c. Lower of a and b closing stock does
d. None of the above not mean cost or NRV
whichever is lower to
be followed.
Problems from 46 – 50 are based on the following illustration
1000 boxes costing Rs.250 each sent on
consignment. Rs.10000 spent on freight. 20
boxes were damaged beyond repair. Insurance
company paid Rs.4000. Consignee took delivery
of 1000 boxes and spent for carriage and freight
on taking delivery Rs.19600. Sold 900 units by
consignee for Rs.412 each. Commission is 10%
46 What is the cost of damaged boxes? c. 5200. Cost @ 250
a. 5000 plus prorata expense
b. 5239 incurred by consignor
c. 5200 is to be taken.
d. 8240
47 What is the loss to be transferred to profit and d. Cost of damaged
loss account? item was Rs.5200.
a. 8240 Insurance company
b. 4240 paid Rs.4000. The
c. 5200 balancing figure of
d. 1200 Rs.1200 shall be
transferred to Profit
and loss account
48 How many units were taken delivery by d. None of the above.
consignee? Though the
a. 920 consigned goods
b. 980 were damaged,
c. 900 consignee took
d. None of the above delivery for the entire
1000 boxes.
49 Consignee’s expenses of freight shall be applied c. Though 1000
on boxes were taken
a. 1000 units delivery, only 980
b. 900 units boxes for which care
c. 980 units would be given for
d. 960 safe delivery
50 What is the value of closing stock? b. Refer working
a. 20000 notes
b. 22400
c. 22960
d. 22368