How to Record Consignment Revenue
Accounting for sales when goods are held by a third party but controlled by the entity until sale.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash | Asset | 1,200.00 | - |
| Revenue | Revenue | - | 1,200.00 |
| Cost of Goods Sold | Expense | 700.00 | - |
| Inventory on Consignment | Asset | - | 700.00 |
💡 Accountant's Note
Revenue is recognized only when the consignee sells the product to the end customer, as this is when control transfers.
Practitioner & Systems Framework
💻 ERP Architecture
Set up virtual warehouses for each consignee to track specific quantities.
⚠️ Audit Flags
Lack of periodic inventory counts at consignee locations.
📄 Required Documentation
Consignment agreement and monthly sales reports from the consignee.
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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.
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