Consignment Stock
Encyclopedia
Consignment stock is stock
legally owned by one party, but held by another.
of consignment stock is passed only when the stock is used (issued). Unused stock in a warehouse may be returned to the supplier
.
inventory
and debit
customer consignment stock. Only after a customer actually uses the consignment stock may an accounts payable
be created.
Stock and flow
Economics, business, accounting, and related fields often distinguish between quantities that are stocks and those that are flows. These differ in their units of measurement. A stock variable is measured at one specific time, and represents a quantity existing at that point in time , which may have...
legally owned by one party, but held by another.
Ownership
OwnershipOwnership
Ownership is the state or fact of exclusive rights and control over property, which may be an object, land/real estate or intellectual property. Ownership involves multiple rights, collectively referred to as title, which may be separated and held by different parties. The concept of ownership has...
of consignment stock is passed only when the stock is used (issued). Unused stock in a warehouse may be returned to the supplier
Supplier
Supplier may refer to:*Manufacturer, uses tools and labor to make things for sale*Processor , converts a product from one form to another*Packager , encloses products for distribution, storage, sale, and use...
.
Accounting
As ownership of consignment stock is not transferred until use, invoicing is not immediate. To account for a replenishment of consignment stock at a customer site, a manufacturer must creditDebits and credits
Debit and credit are the two aspects of every financial transaction. Their use and implication is the fundamental concept in the double-entry bookkeeping system, in which every debit transaction must have a corresponding credit transaction and vice versa.Debits and credits are a system of notation...
inventory
Inventory
Inventory means a list compiled for some formal purpose, such as the details of an estate going to probate, or the contents of a house let furnished. This remains the prime meaning in British English...
and debit
Debit
Debit and credit are the two aspects of every financial transaction. Their use and implication is the fundamental concept in the double-entry bookkeeping system, in which every debit transaction must have a corresponding credit transaction and vice versa.Debits and credits are a system of notation...
customer consignment stock. Only after a customer actually uses the consignment stock may an accounts payable
Accounts payable
Accounts payable is a file or account sub-ledger that records amounts that a person or company owes to suppliers, but has not paid yet , sometimes referred as trade payables. When an invoice is received, it is added to the file, and then removed when it is paid...
be created.
See also
- Consignment agreementConsignment agreementA consignment agreement is an agreement between a consignee and consignor for the storage, transfer, sale or resale and use of the commodity. The consignee may take goods from the consignment stock for use or resale subject to payment to the consignor agreeably to the terms bargained in the...
- ManufacturingManufacturingManufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...
- DistributionDistribution (business)Product distribution is one of the four elements of the marketing mix. An organization or set of organizations involved in the process of making a product or service available for use or consumption by a consumer or business user.The other three parts of the marketing mix are product, pricing,...
- LogisticsLogisticsLogistics is the management of the flow of goods between the point of origin and the point of destination in order to meet the requirements of customers or corporations. Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, and...
, TransportationTransportTransport or transportation is the movement of people, cattle, animals and goods from one location to another. Modes of transport include air, rail, road, water, cable, pipeline, and space. The field can be divided into infrastructure, vehicles, and operations... - Just in time
- Vendor-managed inventoryVendor Managed InventoryVendor-managed inventory is a family of business models in which the buyer of a product provides certain information to a supplier of that product and the supplier takes full responsibility for maintaining an agreed inventory of the material, usually at the buyer's consumption location .A...
- Scan-based tradingScan-based tradingScan-based trading or Scan based trading is the process where suppliers maintain ownership of inventory within retailers' warehouses or stores until items are scanned at the point of sale.-History:...