The consignor consigns goods to consignee and incurs expenses in sending the goods to consignee. Generally, consignor receives a part of the cost of goods sent on consignment as ‘advance’ from consignee. Such goods can be sent by consignor either at cost price or at invoice price for which the consignor will prepare a ‘Pro-forma invoice’. The consignee will incur some expenses for taking delivery of the goods and bringing these to shop/ godown. He will try to sell the goods either for cash or on credit. Consignee will get commission as remuneration of his services.
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After a particular fixed time or as and when the goods consigned are sold by consignee, the consignee sends a statement i.e. ‘Account sales’ showing the description regarding goods sold, expenses incurred and advance adjusted and balance of amount is remitted by consignee to consignor.