How to Record Revenue from Selling Consigned Goods as an Agent
Recording only the commission as revenue when selling goods that legally belong to a vendor partner.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash | Asset (+) | 100.00 | - |
| Payable to Consignor | Liability (+) | - | 80.00 |
| Consignment Commission Revenue | Revenue (+) | - | 20.00 |
💡 Accountant's Note
You only record your commission as revenue. The rest is a liability because you owe that money to the owner of the goods.
Practitioner & Systems Framework
💻 ERP Architecture
Maintain a consignment ledger per vendor showing goods received, quantities sold, amounts owed, and settlement history. The full cash received is split between Payable to Consignor (vendor's share) and Commission Revenue (your share). Never record the full sales price as revenue — this is the principal vs. agent distinction under IFRS 15. Generate a monthly consignment sales report to trigger settlement runs.
⚠️ Audit Flags
The primary audit risk is gross revenue presentation — recording the full sale price as revenue when the store acts as agent. Auditors will request the consignment agreement to confirm the terms. ISTD also monitors whether VAT output is assessed on the full sale price (correct) or only on the commission (incorrect — VAT applies to the full consideration received).
📄 Required Documentation
Consignment agreement per vendor (commission rate, settlement frequency, ownership terms), monthly consignment sales report, Payable to Consignor aging, settlement payment confirmations, and IFRS 15 principal vs. agent assessment.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.