IMPORTANT TERMS AND CONCEPTS:
(a) PROFORMA INVOICE:
Invoice is the forwarding letter sent along with the goods containing particulars ; item; number (quantity or weight or measurement) and the price. As the consignmen consignee is not the buyer therefore the 'forwarding letter* sent along with the consigi for his information. This forwarding letter is a substitute of invoice but it is drawn i invoice and termed a "Performa Invoice".
(b) DELCREDERE COMMISSION:
When such commission is paid to the consignee, the loss on account of ba consignee. This commission will save consignor from loss of bad debts only. If any customer is not in the nature of bad debt (Non-payment due to credit unworthiness ol will be borne by consignor, even if delcredere commission is being paid to consignee.
(C) EXPENSES BORNE BY CONSIGNEE:
If as per agreement, any expense is borne by consignee, or any loss occurs i consignee, such expense or loss will not be debited in consignment account by com will be debited in the profit and loss account of the consignee.
(d) DISCOUNT PAID ON BILLS RECEIVABLE DISCOUNTED BY CONSIGThere are two alternative treatments for this item:
(i) When discount is treated as "consignment expense" it is debited to consig(ii) When discount is treated as "financial charge", it is debited to profit;
(e) GOODS INVOICED AT A PRICE ABOVE COST:
If consignor sends Performa invoice to consignee at a price above cost, profit the basis of cost. Therefore, adjustment shall be made for excess of invoice price ovc value of "goods sent on consignment" and "consignment stock".