Consignment A Manufacturer or a wholesaler often find it convenient to sell goods through agent who sells goods on behalf of the consignor or principal , the person to whom the goods are sent called as consignee or agent and the goods so sent is called as consignment. Thus consignment may be defined as a shipment of goods by a trader to an agent for sale on commission on the sole risk and account of the former.

Consignment The goods sent by the consignor to consignee is sold on behalf of the consignor. therefore, the consignor would like to know the profit earned or loss suffered from each different consignment. The person who sells the good called as consignor or principal. The person to whom goods are sent called as consignee or agent. The goods so sent called as consignment.

Features of Consignment Consignor sends the goods to the consignee or agent for the purposes of sale at a profit. Relationship between consignor and consignee is that of principal and agent. The consignor does not sell the goods to the consignee. He can ask for the sale proceeds from the consignee only when goods are sold and not otherwise. The consignee is entitled to be reimbursed for all the reasonable expenses incurred for receiving and selling the goods. He is also reimbursed for the agreed amount of commission. The consignee is not responsible for any loss or destruction of the goods belonging to the consignor provided he has taken reasonable care in protecting the goods. If there are any goods which remain unsold on any date, they belong to the consignor. Any profit or loss on goods sold on consignment basis belongs to the consignor only.

Characteristics of Consignment 1.Ownership: Ownership is not transferred to the consignee, it remains with the consignor. 2.Relationship: Relationship between consignor and consignee is that of principal and agent  3.Risk of Damages: Consignee holds the goods at the risk of the consignor, so any damage to the goods is a loss to the consignor

Characteristics of Consignment 4.Return of Goods: The consignee may return the goods to the consignor if not sold  5.Expenses After Delivery: Expenses after delivery are borne by the buyer   6.Entitled to reimbursed: consignee is entitled to reimburse for all the expenses incurred in selling of goods and also get reimbursed for the commission agreed between the parties..

Consignment Consignment Account: Consignment account is by nature a profit and loss account. One separate account is devoted to each different consignment with the heading "Consignment to.........account". All expenses specially related to the consignment must be debited to the concerned consignment account whether incurred by the consignor or by the consignee and all revenues and closing stock should be credited to this account. The difference between the two sides of this account will show the result of the particular consignment. Consignee Account: In cases where it is customary for the consignee to send some money as an advance against the consignment the payment is merely and advance (by way of security) and not a part of payment. Hence the advance received from the consignee should be posted to the credit side of the consignee's personal account. In case part of the stock is still lying unsold the proportionate amount of advance should be carried down as credit balance in consignee's personal account.

Consignment Consignment stock account When all the goods sent on consignment have not been sold by the consignee at the time of preparing final accounts by the consignor the unsold stock is brought into books by means of the following journal entry: Consignment stock account Dr.           Consignment account Cr. The consignment stock account is an asset and will be shown in the balance sheet. Next year it will be transferred to the debit side of the consignment account. The principle of valuing stock "cost price or market price whichever is lower" applies to consignment also.. Generally all expenses incurred till the goods reach consignee's godown etc are treated as part of the cost whether incurred by the consignee or consignor. Expenses incurred in storage and selling the goods after the goods reach consignee's godown are not to be considered in the cost of the unsold stock (closing stock).

Consignment Sometime a part of the goods sent on consignment is damaged or lost. A loss may be a normal loss or abnormal loss. Normal Loss: Loss of quantity of goods in the normal course of business is inevitable or unavoidable, such as loss because of loading and unloading of goods, leakage, evaporation or shrinkage is known as normal loss. The treatment of normal loss is to charge it to consignment account.Value of stock is inflated to cover the normal loss. In other words such loss is absorbed by the remaining units.

Consignment Abnormal Loss: This type of loss is an avoidable loss because it does not arise due to the nature of the goods. Such loss may arise due to hard luck of consignor (i.e. destruction of goods by fire, an accident or theft).. This type of loss does not effect the value of goods and if part of the consignment has been lost in such a manner, one should debit the value of the goods lost to abnormal loss account/profit and loss account. and credit the consignment account so that one may judge the profitability of the consignment properly. On the preparation of the final accounts of the business (trading and profit and loss account), this loss is finally shown on the debit side of the profit and loss account being a loss of the business as a whole

Non-profit organization Non-profit making organization are those, which do not buy/manufacture and sell goods and whose primary object is not to earn profit. Their object is to do good to the society through welfare activities. From the book-keeping point of view the aim of such organizations is the pursuit of some interest other than financial benefit, so these may be termed as Non-Profit making Organizations. Although these organizations are not meant for profit earning, yet organizations of this sort must have funds to promote their activities, and these funds must be honestly accounted for.

Receipt and Payment account A receipt and payment account is a cash book summarized for a given period“ analyzed and classified under suitable headings, including the opening and closing balances".

Characteristics of Receipt and Payment Account: All cash receipts during the whole year are recorded on its left hand (i.e., debit) side. While all the cash payments during the whole year written on its right hand (i.e., credit) side, arranged in a classified form. Cash receipts and cash payments of both capital and revenue nature are recorded here. Only cash transactions are recorded in this account. It generally shows a debit balance. In case of bank overdraft balance, however, its net balance may be credit. Again, it may also show nil balance but such occasion is rare. Its closing balance indicates closing cash in hand and closing cash at bank. . It is prepared on the last day of the accounting year

Non-profit organization All transactions relating to non-profit-seeking concerns like Club, Library etc. are recorded in the books of account strictly according to double-book keeping system. At the year-end result is determined through Final Accounts. Final Accounts consist of two stages: Income and Expenditure Account Balance Sheet

Income and Expenditure Account. The account through which surplus or deficit of a non –profit organization is ascertained, is called Income and Expenditure Account. All the information necessary for preparation of this account will be available from ledger accounts. Its left-hand (i.e. Debit) side records all revenue expenditure, while the right-hand (i.e. Credit) side records all revenues relating to the current year. The balance of the account, if credit, indicates surplus, i.e. excess of income over expenditure. Conversely, the balance of the account, if debit, indicates deficit, i.e. excess of expenditure over income.

Hire purchase Hire purchase is an agreement between two parties in which one party purchase any asset from other party. Because he has no money to pay, so he pays per month hire charges. Vendor has the possession of asset. When buyer pays total price of assets in the form of hire charges, then asset is transferred to its purchaser. Vendor may  also transfer asset before last payment of installment on his own risk. If buyer will become defaulter, vendor has right to get his asset from hire purchaser.

Hire purchase a) Cash price is that price which will be paid if any asset is purchased on cash without installment. b) Hire price = cash price + interest for risk of giving asset on instalment. c) Down payment = Payment at the beginning of deal of hire purchase. There are four methods of accounting for hire purchase

Characteristics of Hire-purchase system Hire-purchase is a credit purchase. The price under hire-purchase system is paid in instalments. The goods are delivered in the possession of the purchaser at the time of commencement of the agreement. Hire vendor continues to be the owner of the goods till the payment of last instalment. The hire-purchaser has a right to use the goods as a bailer. The hire-purchaser has a right to terminate the agreement at any time in the capacity of a hirer. The hire-purchaser becomes the owner of the goods after the payment of all instalments as per the agreement. If there is a default in the payment of any instalment, the hire vendor will take away the goods from the possession of the purchaser without refunding him any amount.

Hire purchase-Recording of journal entries 1st Method : Cash Price Method  Under cash price method, we are deal hire purchase transactions just like normal transactions. When transactions or event happen, we record them. 2nd Method  Interest Suspense Method In this method, we open interest suspense account. All the interest which is not paid on hire purchase asset will go to  interest suspense account. When interest will become due, interest account will be debit and interest suspense account will credit 3rd Method :  Trading Method In this method, the hire purchase trading account is prepared in the book of vendor of the asset 4th Method : Stock and Debtor Method In this method, hire purchase stock, hire purchase debtor and hire purchase adjustment account are maintained

Hire purchase Posting in Ledger Accounts: After passing journal entries under any of the methods discussed above, the following ledger accounts are opened in the ledger and the postings are made accordingly. (i) Asset A/c. (e.g. Trucks A/c, Machinery A/c. etc.) (ii) Vendor's A/c. (iii) Interest A/c. (iv) Depreciation A/c.

DEFINITION OF TAXATION  Taxation is the inherent power of the sovereign, exercised through the legislature, to impose burden upon the subjects (Individual, firm or corporation) and objects (goods and services) within its jurisdiction, for the purpose of raising revenues to carry out the legitimate objects of the government. TAXES Enforced proportional contributions from properties and persons levied by the State by virtue of its sovereignty for the support of the government in order to fulfil public needs. Direct Taxes( Income tax) and Indirect Taxes(Sale tax)

BASIS OF TAXATION GOVERNMENTAL NECESSITY* The existence of the government depends upon its capacity to perform its two basic functions: A. to serve the people B. to protect the people

PURPOSE OF TAXATION PRIMARY-To raise revenue in order to support the government SECONDARY- a. Used to reduce social inequality b. Utilized to implement the police power of the State c. Used to protect our local industries against unfair competition d. Utilized by the government to encourage the growth of local industries

Business Taxes Both individuals and businesses must pay taxes on income. The income of sole proprietorships and partnerships is taxed as the income of the individual owners, whereas corporate income is subject to corporate taxes. Both individuals and businesses can earn two types of income—ordinary income and capital gains income. Under current law, tax treatment of ordinary income and capital gains income change frequently due frequently changing tax laws.

Business Taxes: Ordinary Income Ordinary income is earned through the sale of a firm’s goods or services and is taxed at the rates given by tax authorities..

Business Taxation: Capital Gains A capital gain results when a firm sells an asset such as a stock held as an investment for more than its initial purchase price. The difference between the sales price and the purchase price is called a capital gain. For corporations, capital gains are added to ordinary income and taxed like ordinary income at the firm’s marginal tax rate.

Knowledge of Taxation Taxation and Finance Function A sound knowledge in taxation, both direct and indirect, is expected of a finance manager, as all financial decisions are likely to have tax implications. A finance manager should be able to assess the tax benefits before committing funds. Taxation and Treasury Function Treasury has become an important function and discipline, not only in banks, but in every organization. It deals with optimal management of cash flows, judiciously investing surplus cash, anticipating and meeting emerging cash requirements it helps in judicial asset liability management for taxation purposes. It also includes, managing the price and exchange rate risk through derivative instruments. So, a finance person should posess knowledge of maintaining proper taxes