Consigned goods

Definition

Consigned goods are items sent by the owner (consignor) to another party (consignee) who will sell them on behalf of the owner. The consignor retains ownership until the goods are sold.

5 Must Know Facts For Your Next Test

1. The consignee does not own consigned goods but is responsible for selling them.
2. Consigned goods remain in the consignor's inventory until they are sold.
3. Revenue from consigned goods is recognized by the consignor upon sale to a third party, not when the goods are transferred to the consignee.
4. Costs incurred by the consignee, such as storage and selling expenses, are typically reimbursed by the consignor.
5. Consigned inventory should be disclosed separately in financial statements to avoid confusion with regular inventory.

Review Questions

Related terms

Consignor: The owner of consigned goods who retains ownership until they are sold.

Consignee: The party responsible for selling consigned goods on behalf of the consignor.

Inventory Valuation Methods:

Techniques used to assign cost to inventory, impacting financial statements.