DEPOSITS

GENERAL INDEX
PAGES

INTRODUCTION............................................................... 3

CHAPTER I.
DEPOSITS
1.1. DEFINITION....................................................... 4

1.2. CHARACTERISTICS…………………………………………………… 5
1.3. DIFFERENCES BETWEEN SALE AND CONSIGNMENT……………….. 6
1.4. ADVANTAGES……………………………………… 7
1.4.1. CONSIGNOR
1.4.2. CONSIGNEE
1.5. LEGAL ASPECTS..................................................... 7

1.5.1. COMMERCIAL CODE

1.6. DUTIES AND RIGHTS OF THE CONSIGNOR AND OF
CONSIGNEE………………………………………………………….. 19
1.6.1. DUTIES AND RIGHTS OF THE CONSIGNOR
1.6.2. DUTIES AND RIGHTS OF THE CONSIGNEE
1.7. ACCOUNTS USED BY THE CONSIGNOR………………… 21
1.8. USE OF ORDER ACCOUNTS………………………………… 22
SETTLEMENT IN SALES……………… 25
CHAPTER II
ACCOUNTING PROCESS OF THE DEPOSITS
2.1. RECORD OF OPERATIONS…………………………………. 28
2.1.1. CONSIGNOR
2.1.2. CONSIGNEE
CONCLUSION
BIBLIOGRAPHY………………………………………………………………… 33
 DEPOSITS

INTRODUCTION

A consignment is a delivery for deposit of goods, that is to say,

a transfer of possession of goods from its owner, called the principal, to
another person, called the consignee, who will sell these products for
account and order of the owner.. It is important to emphasize that when we send
goods on consignment, we do not transfer ownership to the consignee,
we continue to maintain the right of ownership over these
goods, in turn, it must be kept in mind that it is not being sold the
merchandise, we are only transferring to the consignee's warehouses some
goods that remain ours. Therefore, the consignee, while
do not sell this, you will not owe us money, you will only have all the responsibility
of the goods received.

Theregistrationthe goods on consignment is essential for

check the balance of the merchandise that the agent has as well as the
incomeor losses due to theadoptionof this recreational arrangement.
The account of consigned goods is also very helpful.
lump sum price because in this way the agent does not know the real amount
of the goods that have been given to him on consignment and in this way
we can prevent him from becoming a potential competitor of the company in
an expectant.

The fundamental difference between sale and consignment lies in that

the delivered goods remain in the possession of the client until the
moment when the consignee sells them. Based on this difference, the
The owner of the merchandise must include it in their inventories and cannot
recognize no utility until their sale.

The consignee will have a single income represented by the commission.

perceived when selling the goods and, as their depositary, has
a set of rights and obligations.

3
 DEPOSITS

CHAPTER I

DEPOSITS

1.1. DEFINITION:

It is a procedure to increase sales volume at low prices.

costs, constitutes the transfer of custody of the merchandise, but not of the title
of property, by the owner, referred to as 'CONSIGNOR', to another
merchant referred to as 'CONSIGNOR', for the purpose of carrying out the
sale in exchange for a commission.

In Venezuela, the depositions are regulated in the Code of

Commerce, refers to it as a commission contract, from Art. N. 376 until
In 409, it is recommended to read and interpret the mentioned articles.
to make the study of the accounting records that originate easier
for the operations carried out with the goods that are in
consignment, both in the books of the consignor and in those of the consignee.

In the study of consignments, three concepts must be distinguished.

basics:

COMMITTER OR CONSIGNOR

Merchant who sends goods, but not the title of ownership, to another.
that may be located in the same square or outside of it, so that it proceeds to
to sell it.
COMMISSION AGENT OR CONSIGNEE

Merchant who receives merchandise sent by the consignor, for

try to sell and collect a commission when it is made.
4
Goods on consignment
 DEPOSITS

It is the merchandise sent to the consignee to carry out the

sale.
When we send goods on consignment, we do not transfer the
property to the consignee, we still maintain the right to
ownership of these goods, it is worth stressing that it is not being sold the
merchandise, we are only transferring to the consignee's warehouses some
goods that are still ours. Therefore, the consignee, while
Do not sell this, you will not owe us any money, you will only have full responsibility.

of the received goods.

1.2. CHARACTERISTICS OF THE CONSIGNMENTS:

The consignment is a sales operation, because it only exists in it

transfer of the merchandise, the title of property remains in the power of the

consignor until the moment the consignee sells the merchandise

and shall be transferred to the buyer.

Since consignment is not a sale, no profits are made nor

losses until the consignee has not made the sale of the goods.

The consigned goods remain the property of the consignor until the
the consignee does not make the sale, therefore, it must be shown in the
balance sheet in separate accounts and in the inventory section.

Due to the fact that it is not the property of the consignee, the merchandise in
Consignments will never appear in your books as part of your inventory, and
They will be accounted for in memorandum accounts. The same occurs with accounts payable.

charge. Which originate from sales of consignment goods, 'NO

IT IS PROPERTY OF THE CONSIGNEE, therefore it must be registered.
on order accounts.
 Deposits

If the consignee becomes insolvent, the consignor has the right

to remove your merchandise.

1.3. Differences between consignment and sale

There is a fundamental difference between what it means to sell and to give.

Merchandise on consignment, that is: In a sale, the title of the property of
the goods pass from the seller to the buyer, while in a
consignment the title of ownership of unsold goods remains
belonging to the consignor or principal. This difference is due to:

1- That a consignment is not a sale, no profit is made.

the transaction, and no profit should be recognized in the books until
the consignee has sold the goods.

2- Because the consignor retains ownership of the

merchandise, any of which that have not been liquidated must be
included in the inventory of the client or consignor when the books are closed.

3-In the event that the consignee becomes insolvent, the consignor
you can recover your goods, in which case you will not have to occupy a
positioned among the other creditors to be able to receive a settlement to
pro rata.

In a sale, the title of property of the goods passes from the seller to the buyer.
buyer, whereas in a consignment the title of ownership is
keeps the consignor until the consignee makes the sale to a
third.
 DEPOSITS

Generally, in a sale, a profit is made, whereas in a

no profit is made on the consignment and the consignor must acknowledge
a gain in the books when the consignee has sold the merchandise.

1.4. ADVANTAGES OF CONSIGNMENTS:

1.4.1. CONSIGNOR:

There is less risk since the consignee is not the debtor of

consignor, since the consignor receives the product of the sale
only this one is carried out.

Offers the opportunity to obtain wider marks, the

consignors are not always willing to invest in products
especially if they are new, but they will always be willing to
receive merchandise on consignment.

The consignor can control the selling prices.

Since the property title is held by the consignor, the

Consigned goods return to their owner if not sold.
 DEPOSITS

1.4.2. CONSIGNEE:

Deposits avoid heavy investments, especially if it is about

of new products, with unstable prices or low demand.

They avoid the danger of immobilizing capital in goods.

invincible

1.5. LEGAL ASPECTS.

1.5.1. Commercial Code:

The commercial code is one of the legal bases that establishes the
conditions and all aspects related to the consignments. A
the following presents the different articles with their analysis.

Art. 376._"Commission agents are those who engage in commercial acts on their own
name on behalf of a client.
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The broker is the one who carries out a commercial act, that is to say,
any type of transaction related to buying or selling
goods and the ability to obtain benefit from it, taking into account that e
the broker carries out this operation in his own name on behalf of
a principal.
 Deposits

Art. 377._ "The commissioner is not obliged to declare the person with whom
the name of its principal is contracted; but is obligated directly and
personally towards that one, as if the business were his own.

The broker is not obligated to reveal or declare to the

a person with whom they contract the name of their principal but this is in
the obligation and the duty to remain directly and personally towards that one
as if the business were his own.

Art. 378. "The principal has no action against the person with whom they have dealt
the broker and, conversely, this one does not have it against the principal.

The client has no dealings or relationship whatsoever with the person to whom the
the agent has dealt and similarly he does not have it with him either
principal.
Art. 379. "If the entrusted business is conducted under the name of the principal,
the rights and obligations it produces are determined by the
provisions of the Civil Code regarding the mandate contract; but the mandate
Commercial is not free by nature.

In case the business that was commissioned is carried out and executed in
name of the principal, the duties and rights that it produces are going to
establish through the civil code regarding the mandate contract,
considering that the commercial contract is not free of charge for
nature.
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Article 380._"The commissioner may accept or decline the commission that is given to him; but

if you refuse, you are obligated under liability for damages and losses:
To notify the client of their rejection as soon as possible.
2. To take, while receiving instructions, the conservative measures that the
business nature requires, such as those aimed at preventing the
 Deposits

loss or deterioration of the consigned goods, the expiration of a title,

an injunction or any other imminent harm.

The broker may receive the merchandise sent to him or not, but
to refuse or reject certain merchandise will be under your responsibility

liability for damages and losses

a) Predict or warn and notify the client of the refusal of certain

merchandise as soon as possible.

He is also obliged to receive the instructions or measures that

are necessary for the preservation of the merchandise, which can
to be, the suitable ones to prevent the merchandise from being damaged or deteriorating,

expiration of a title, a prescription, or any other imminent damage.

Art. 384. "The agent is responsible for the deterioration or loss of the thing
that it has in its possession, not arising from fortuitous events or from
own vice of the same thing, in the terms expressed in article 173.
The damage will be calculated based on the value of the item at the place and time in

what may have happened.

The broker becomes the owner of the money and bearer instruments received.
on behalf of the client, becoming a debtor to them and running
all its risks, unless otherwise agreed.

The agent is responsible for the things, damages, losses, and deterioration.
of the consigned merchandise that it has under its responsibility, that
not originating from acts that happen randomly. The damage will be calculated by
9
the value of whose thing or merchandise in the same place and at the time when
I would have arrived.

Art. 391._"Once the assigned transaction is completed, the commissioner is

thank you
 Deposits

1.- To immediately notify the principal.

2.- To provide a detailed and verified account of their management.

3.- To pay the client the balance that results in their favor, using the means
that he would have designated it; and in the absence of designation, in the manner that is customary

in the square.

Art. 401. "Whenever the agent sells on credit, he must state the
names of the buyers in the accounts and in the notifications that I give to the

the client, and by not doing so, it is understood that the sales were cash.

R/ This article informs us that when the broker makes a sale to

deadline, it must disclose the names and details in the accounts, and if
In the event that such data is not reflected in the accounts, it will be taken into account.

sale that was canceled for cash.

Article 402: 'The agent must collect the amounts due at their maturity.'
for the effects recorded; and is liable for the damages and losses caused by
its omission, unless it proves that it timely used the legal means to
get the payment.

Article 407: "disqualified, for any reason, to perform the commission. It is

will notify the client to provide what is necessary.
The commission does not end with the death of the principal.
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Art. 408. "The claims of the principal against the agent for misconduct
The performance of the commission is prescribed for one year.

The commission agent against the principal for the payment of his fee is
they are prescribed for two years.

Character of the contract

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Art. 382. "Once the commission is expressly or tacitly accepted, the commissioner must
execute it and conclude it; and if not doing so, without legal cause, will respond to the

the party responsible for the damages and losses that may occur. But if the commission
requires funding provision, the broker is not obliged to execute it
even if she has accepted it, as long as the client does not make the provision to her

sufficient amount, and it may still suspend the commission when it has
The received supply is exhausted.

R/ The agent accepting the commission must accept it and conclude it; and
not doing so, without legal cause, is obligated to respond for the
damages and losses that may occur to him. In case the commission
requires funds provision, the commissioner is not found in the
obligation to execute it even though the principal has accepted it, if the client
it does not make the provision in sufficient quantities and may even suspend
the commission when the received provision has been exhausted.

Art.385._"The agent must strictly adhere to the instructions of

your client in the performance of the commission; but if he believes that
fulfilling them to the letter will result in serious harm to your principal, may
suspend the execution, giving notice at the first opportunity.

In no case may it act against the express and clear provisions.

of his principal.

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In the absence of instructions in extraordinary and unforeseen cases, if not
You will have time to consult the client, and will proceed prudently in favor.
of the interests of the principal and how it would proceed in its own matter.

The same will apply in the case where the principal has authorized you to
"proceed at their discretion."
 Deposits

Art. 386. 'The agent must promptly notify the principal of all
the news related to the negotiation that I would be in charge of that may
to induce him to modify or revoke his instructions.

Article 387: "The broker must perform the commission himself; and if the
delegate, without prior authorization from the client, is responsible for the execution of the

delegate.
If no person has been designated in the authorization to delegate
determined, responds to the delegation that does it notably in person
incapable or insolvent.

Whenever I delegate the commission, I must notify the principal.

In all cases, the client may exercise their actions against the
delegate.

Article 388. "Commission agents are prohibited from representing in the same business

opposing interests, without the express consent of the interested parties.

Fees of the consignee or broker

Art. 389. "The commercial agent has the right to demand a remuneration
for the performance of your duties. If there is no prior agreement regarding your
amount, it will be subject to the use of the square in which the mandate has been executed.

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Art. 390._“All the savings and advantages that the commissioner achieves in the
businesses that it does, on behalf of others, will be paid to the principal.

Art. 392. "The agent must pay interest on the amounts he retains."
unduly against the orders of the principal.
 DEPOSITS

Conversely, they have the right to interest on the balance that results in
in your favor the account that is rendered from the date of this; but the interest on
the amounts that you suggest to fulfill the commission will run from the date
of the supplement, except for the time when due to not submitting on time the
he himself will cause the delay in payment.

Art. 403. "If the commissioner receives on a sale, in addition to the commission
ordinary, another called guarantee, the risks of the
collection, being obligated to satisfy the client with the proceeds of the sale,
within the same deadlines agreed upon by the buyer.

In the event that the commissioner or consignee receives in addition to

his commission, another benefit or guarantee, for his work, must be assumed
all the risks that arise in the collection process, without exceeding the
established timeframes.

Rights of the consignees

Art. 393. "Every agent has a privilege over the value of the goods or
effects that have been issued, deposited or consigned, solely by
fact of the expedition, the deposit or the consignment, by all the
loans, advances or payments made by him, already before receiving the goods
or effects, as long as they are in your possession and for the interests and commissions
accrued and incurred expenses. This privilege only subsists on the condition of
that the goods or effects have been placed and remain in the possession or at

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disposition of the commission agent in their warehouses or ships, or in the possession of a

third, or in customs or another public or private deposit; and in case that the
goods or effects are still in transit, which I can prove, with the
knowledge or bill of lading signed by the driver, that has been made to him
expedition.
 DEPOSITS

The agent has the right of retention; and having been carried out
goods or effects, it is paid from its credit with the product made, with
preference to all creditors of the principal.

Art. 394._"The commission agent who has acquired goods or effects on behalf of
of a principal, has the same rights over them and their price as
retention and privileges established in the previous article, for the price that is
has paid or must pay and for the interest, commission, and expenses, provided that
the goods or effects are in their possession or at their disposal under the terms
expressed; and in case they have been issued, that the goods or effects do not
have been delivered to the client's warehouses, and the agent can
prove, with the knowledge or bill of lading, that the shipment was made.

This article tells us that the agent who has acquired merchandise
has over these privileges solely by the issuance, of
deposit or consignment, for all loans, advances or payments
made by him, already before receiving the goods or effects.

Instructions and various

Art. 381. "If he did not receive instructions in a reasonable time to the
distance from the client's home, the broker can deposit
judicially the goods or effects consigned, and have them sold with the
authorization of the Judge, enough to cover the sums that may have been expended for
cause of the deposit.
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In the event of omission or lack of instructions, the merchandise may be
entrusted to a court and it may be sold with authorization
from a judge up to the amount that also covers the expenses caused by the
same.
 DEPOSITS

Art. 383._"The agent must examine the condition in which they receive the
registered effects, legally record the differences or in the act
deteriorations that I see and communicate it as soon as possible to the client.

If not done, it is presumed that the goods and effects were

in accordance with what is expressed in the invoice or in the bill of lading or knowledge.

The same will apply in any case that arises regarding the things.
reported damages or losses.

At the moment the agent receives the merchandise in

the consignor will be obliged to verify that it is in perfect condition
conditions, otherwise it must be communicated immediately to the
client. Failing to communicate this will be understood as if the merchandise was

in perfect condition at the time of delivery.

Art. 395. "The broker who renders accounts to his principal that were not
in accordance with the entries in their books, or that alters the prices or conditions
of the contracts entered into, or suppose expenses, or increase those that there are
Indeed, he will be punished as a perpetrator of misappropriation, in accordance with the Code.

Penal.

The broker who charges a commission must be in accordance with the

seats of the client's book and cannot alter any of them
established agreements, whether contracts, additional expenses, or others,
the opposite will be punished according to the law, that is, one must respect each
one of the conditions under which the commission is being given.
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Art. 396. "The goods or effects received or purchased by the commission agent
on behalf of the client, belong to him; and those that are issued; travel by
account and risk of the principal, unless there is an agreement to the contrary.
 DEPOSITS

R/ All products that are received or purchased by the mediator

on behalf of the delegator, belong to them, and the merchandise that is already
they have sold these rooms, but who bears all the responsibility
The client is the one who is committed, unless there was an agreement.

Art. 397. "Whenever the sale of all or part of the property is not so urgent.
effects recorded to prevent their next loss or deterioration, or great
cost of conservation, with no time to wait for provisions
specials of the client, the broker must make the sale at auction
public, reporting without delay to the client.

When there is no rush to sell any goods to avoid future issues.

losses or deterioration and there is not enough time to wait for any
special provision, they may be publicly auctioned off
by the agent, but the principal cannot have delays in the
cancellation of the merchandise.

Art. 398. "When the agent receives goods from different principals
of the same species, you must distinguish them with a countermark.

In no case shall the agent alter the marks of the

goods consigned, without the express authorization of the principal.

It is the commission agent's duty to distinguish the merchandise with some

mark the seal, as long as it receives products from different
clients, in order to identify where each of them comes from. Not
however, the broker is prohibited from removing, changing, etc.; said
brands, without having the permission of the delegator.

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Art. 399. "If the broker makes loans, advances or credit sales,
without the authorization of the principal, they may demand immediate payment of the amount of the

operations carried out, leaving them to the account of the agent.

 DEPOSITS

The provisions in this article do not prevent the agent from observing
the use of the square, to grant other terms to make sales payments
considered in cash, as long as it does not have orders from its principal,
contrary.

In case the broker makes any sale, any loan or

some anticipation without having informed the delegator, simply the
the client may demand the immediate cancellation of all
operations carried out on behalf of the agent.

Art. 400. "Although the agent is authorized to sell on credit, not

You must do it to a known insolvency person, nor expose the interests of
at the client's manifest risk.

It is extremely necessary and also an obligation according to what is imparted.

said code, that the agent in order to make a sale to

the deadline must be met with people who have references and under strict guidelines

follow-up, to not endanger the client that such

the buyer does not go to cancel their debt and said sale is a fraud.

Art. 404. "When a single transaction involves effects of

different principals, or of the agent and of some or several principals, must
make a distinction on the invoice by stating the brands and trademarks that
design the different origin and also note it in the entries of the
books.
R/ Since there are various operations, from one or more clients or from
commission agent, the issued invoice must contain the brands and
trademarks that identify the origin of each one, likewise
they must register in the different books.
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Art. 405. "The broker who has claims against the same person
resulting from operations carried out on behalf of different clients, or
 Deposits

on their own behalf and on behalf of others, must indicate in their entries and in the receipts that

I will grant the operation for which the debtor makes partial deliveries.

If the annotation had not been made, the payments will be allocated according to the

following rules:

1st If the credit comes from a single operation executed on behalf of different
people, the deliveries will be distributed among all interested parties, pro rata of
his credits.
2nd If there are credits from different operations, the payment will be applied to
everyone pro rata, if all deadlines are equally overdue or about to expire.
3rd If at the time of payment some deadlines were overdue and others were about to expire,
the payment will be applied to the overdue credits, according to the previous rules; and the

Any excess, if there is any, will be distributed proportionally among those not expired.

The broker who makes credits with people from different

principals, must register in their entries and receipts of the contributions
partial payments made by the debtor, for proper monitoring. In case that
the contributions of individuals will not be recorded, it must be carried out by the

different rules established for each case.

Art. 406. "The principal has the authority, at any stage of the business, to
revoke or modify the commission, remaining responsible for the results of everything
done, until the commissioner becomes aware of the revocation or of the
modification.

The consignor or principal may revoke or modify, during the

business, the commission of the consignee, as long as it is
informed to him.

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 DEPOSITS

Art. 409. "In cases not specifically provided for in this Section, ...
the provisions of the Civil Code regarding commercial commissions will apply
the mandate.

The provisions of the civil code will be applied subsidiarily according to

be the case.

1.6.DUTIES AND RIGHTS FOR THE CONSIGNOR AND FOR THE

CONSIGNOR.

1.6.1. CONSIGNOR

RIGHTS

The merchandise is your property until it is sold.

You have the right to receive advances before the sale is made.

The accounts receivable that originate from sales in

The consignments are your property.
 Deposits

You can require the consignee to make payments on their behalf.

You have the right to receive the proceeds from the sale as soon as it is made.

I carried out.

Duties

Cancel the commission to the consignee.

Provide warranty service for the sold goods.

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You must reimburse the advances and expenses that the consignee has.
canceled by your account.

1.6.2.CONSIGNEE
 Deposits

RIGHTS

You have the right to receive the merchandise in good condition.

Can grant credits.

You have the right to have your remuneration 'COMMISSION' paid.

the sales.

You have the right to be reimbursed for the advances and all payments.
that I carried out on behalf of the consignor.

Duties

It is obligated to prepare the settlement and send it to the

consignor.
 DEPOSITS

You must take care of the consigned merchandise as if it were yours.

You must keep the consigned merchandise marked or labeled and

besides separated from hers.

You must be very careful when granting credits.

You must make the collections promptly.

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1.7. ACCOUNTS USED BY THE CONSIGNOR AND CONSIGNEE

 DEPOSITS

In relation to the accounts to be used by each party involved in the

deposits are:

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Client Consignee

income statements
Client order accounts to record ownership
Consignee
of third-party goods
Goodsequity accounts
delivered on consignment
used to distinguish the goods representing movement accountsthat
the merchandise to is
record
in theirthe
possession
its property that is in the possession of onepending
but whose refund expenses
ownership belongs to the principal.
third.
income- ... statement
client: usedaccounts
to recordto therecord your unique
Debtors by consignments income that is the commission
responsibility for the sale
that the consignee has with
made: used to register the the principal regarding the goods
quarterly accounts to record the payment
debt that the consignee has with the recipients.
client when the goods have been of the pending collection expenses, the payment
sold for cash. of theExpenses
goods sold to to
for .... therecover:
consignee,
used for
etc. distinguish those costs derived from the
Debtors for sale on consignment: consignment that, according to the contract, will be
represents the debt that the purchaser of the cargo owes to the consignor.
merchandise sent on consignment
keeps with the client. - Sale on behalf of third parties: account
used to record the sale of the
Cost per .... per consignments goods on consignment.
made: they represent all expenses
originated by the consignment and the sale Commission obtained by consignment:
that are in charge of the client. represents the amount to be received from the sale of
the goods.
Commission granted by consignment
conducted: used to record the Commission for consignment to be collected:
commission agreed with the consignee for represents the amount to be received from the sale of
the sale of goods. merchandise.

Creditors for consignments Creditors for consignment received:

carried out: represents the amount that the represents the amount that the consignee
The principal must pay the consignee for must pay the client for the sale of the
the expenses incurred and the commission for goods in its possession.
sale.
Debtors on behalf of third parties: account
used to record the debt that the
buyer of consigned goods
maintains with the client in the case of the
credit sales.
 Deposits

1.8. USE OF MEMORANDUM ACCOUNTS

They are those that do not affect or modify balance sheet accounts and
results, that is, accounts of assets, liabilities, equity, income, and expenses.
They represent contingent values or serve as a reminder or of
administrative controls.

In accordance with the double-entry theory, two accounts are opened.

mayor, of nature a debtor and another creditor that denote
clearly what they represent.

The order accounts are classified into:

a) Contingents.

b) Reminder and administrative controls.

c) Prosecutors.

Contingent: "possible future events or conditions of life causes"

unknown or currently indeterminable.
 Deposits

Within the field (contingents) we could mention:

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Guarantees (signatures that ensure obligations).

Litigations (pending trial resolution).

Bonds.

Financial derivatives.

Reminder: within the so-called reminders and controls

we mention the following administrative ones:

Consignment goods.

Issuance of versatile bonds.

Prosecutors: of those classified as prosecutors the following:

Depreciation and amortization.

Non-deductible expenses.

Fully depreciated assets.

 Deposits

Tax losses.

The parties involved when sending and receiving merchandise in

consignment, there is the consignor and the consignee, therefore it is important
distinguish these intervening parties to determine the actor that must
implement ordering accounts.

The account ordering procedure consists of recording the actual cost of

the shipments of goods, the sales made and returns of goods
made by the broker, in Balance and Income accounts as long as
The raised price is recorded in memorandum accounts.

Fixed price. It is the conventional price of the goods that the

the principal declares to the agent.

Order accounts are established to control the movement of the

goods on consignment, at flat rate, correspond to the group of
Registration accounts because the entries recorded in them are

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duplicates of those made in balance sheets and income statements.

Example:

Companies X and Z send merchandise on consignment to Juan Flores, with

a value of Bs.200,000 for the intervention of Mr. Flores (sales to third parties),
will receive a 10% commission, calculated on the previously set sale price
pointed out by the client or consignor.
 Deposits

The consignor, when operating with real goods, will not use memorandum accounts.

The reason is simple, the merchandise will remain your property, the custody
The merchandise will be the responsibility of the consignee or broker.

The consignee will safeguard the merchandise in their warehouse but since not

having ownership of it will not be included in your assets. So

it must reflect the fact through order accounts for its responsibility in
case of theft or damages suffered (merchandise).

-x-

Consignment goods Bs. 200,000

Received consignments Bs. 200,000

When Mr. Flores reports the sale of Bs. 50,000 the company
X y Z will bill the buyer indicated by Mr. Flores. The value of the sale is
will deposit into the client's account who will in turn send the check for the
commission in this case Bs. 5,000.00.
 DEPOSITS

Mr. Flores will deduct the value of the sale from his accounting record:

24

-X-

Received consignments (C.O.A) Bs. 50,000

Goods on consignment (C.O.D) Bs. 50,000

For the gain in his intervention:

-X-
Bank Bs. 5,000
Commission income Bs. 5,000

1.9. SETTLEMENT OF SALES.

Among the duties of the consignee is to report on sales.

made and make the settlements according to the conditions of
agreed consignments. Therefore, once the work is completed
the consignee must inform to its main detailed account of the
operations through the Sales Settlement, which consists of a statement
where all operations related to a certain one are collected
deposit. It constitutes a formal account of the operation in question, and
it must contain the following:

The amount or quantity of goods received.

The sales made.
The expenses that have occurred, and
 DEPOSITS

The corresponding balance, which will be the amount owed to

main, which will depend on the agreement established between both.

25

Below is an example of the Sales Settlement model:

Sales Settlement
Corresponding to water heaters
C. D. Jones & Co.
Chicago, Illinois
Sold at the account and risk of

Date

Sales
5 water heaters at Bs. 125.00 Bs.625.00
Expenses:
Freights Bs. 15.00
Local transport Bs. 3.00
Commission - 25% of Bs. 6,25,00 156,25 174,25
To settle:
Attached cheque Bs.450.75

Consignment goods for sale None

 Deposits

26

CHAPTER II

ACCOUNTING PROCESS OF DEPOSITS

2.1. RECORD OF THE OPERATIONS OF THE CONSIGNOR AND

CONSIGNEE.

This operation adopts two modalities:

A) In which the products sold never constitute inventories of the

consignee, receiving only a commission on the sale (on the value of
this or about said value plus selling expenses: freight, storage,
etc.) and

B) When the products are sold, they become part of the inventory of
consignee, who must buy and pay for them at that moment to the
consignor; no commission is granted but preferential prices are given to the
products.

The price of the products received on consignment is valued; being controlled

In Accounts of Goods Received on Consignment (in the Books
from the consignee) and of Goods Sent on Consignment (in the of

To account for this operation, the following rules must be followed:

a) When products never constitute inventories of

Consignee
 Deposits

Received Goods are recorded in the Merchandise Order Accounts

27
Consignment or Goods Sent on Consignment (which must
analyze by Sub-major Inventory for each product, in which
they will control your physical movements and values).

- The commission granted to the consignee constitutes Financial Income.

for this and Financial Expenses, for the consignor.

- The price of the delivered and sold products constitutes Sales.

of the consignor and sales expenses, they can be treated as Expenses of
Distribution and Sales (if this is a producer) or as Expenses of
Commercial Operation (if it is a marketing entity).

b) When the products are transferred in ownership to the consignee to the

to sell oneself.

* Consignor:

1. When sending the goods subject to the transaction

2.Upon receiving the settlement from the commission agent or consignee and the cash from the sale of the
merchandise shipped and sold.

3.When setting the cost of goods sold

4.Canceling the Order Accounts of the operation.

5.When recording the payment of the sales expenses (freight, etc.) to
commission agent or consignee
6.When recording the commission paid to the agent or consignee.

1. When sending the goods subject to the transaction

Count Description of Accounts and Subaccounts Partial Must News

 Deposits

XXX Goods Sent on Consignment xxx.xx

X - Commission agent or Consignee xxx.xx
XXX Consignment of Goods Sent xxx.xx
X - Corresponding subaccount xxx.xx

28
2. Upon receiving the settlement from the commission agent or consignee and the cash of
the sale of the goods sent and sold.

Count Description of Accounts and Subaccounts Partial Must News

110 Cash in Bank xxx.xx

X - Currency Type xxx.xx
XX - Bank Account xxx.xx
900 Sales xxx.xx

X - Type of Currency xxx.xx

3. When determining the cost of goods sold

Account Description of Accounts and Subaccounts Partial Must News

810 Cost of Sales xxx.xx

X - Corresponding subaccount xxx.xx
195 Inventory of Merchandise for Sale xxx.xx
X - Subaccount that corresponds xxx.xx

4. Canceling the Order Accounts of the operation.

Count Description of Accounts and Subaccounts Partial Must News

XXX Consignment of Shipped Goods xxx.xx

X - Corresponding sub-account xxx.xx
XXX Goods Sent on Consignment xxx.xx
X - Broker or Consignee xxx.xx

5. When recording the payment of sales expenses (freight, etc.) to

commission agent or consignee.

Count Description of Accounts and Subaccounts Partial Must News

819 Distribution and Sales Expenses(Producer) xxx.xx

X - Elements of the Expense xxx.xx
819 Commercial Operating ExpensesDistributor xxx.xx
 Deposits

X - Spending Elements xxx.xx

110 Cash in Bank xxx.xx
X - Currency Type xxx.xx
XX - Bank Account xxx.xx
29

6. When recording the commission paid to the agent or consignee.

Account Description of Accounts and Subaccounts Partial Must News

835 Financial Expenses xxx.xx

X - Paid Commissions xxx.xx
110 Cash in Bank xxx.xx
X - Type of Currency xxx.xx
XX - Bank Account xxx.xx

CONSIGNATORY:

1.Upon receiving the merchandise on consignment

2.When recording the expenses paid on behalf of the principal or consignor.
3.When accounting for the sale of products received on consignment.
4.Canceling the Control Order Accounts of the goods received in
consignment.
5.Upon registering the commission received from the client or consignor.
6.When settling the cash corresponding to the client or consignor for the
sales of goods received on consignment, minus the expenses of
the sale paid by this account.

Upon receiving the goods on consignment.

Count Description of Accounts and Subaccounts Partial Must News

XXX Goods Received on Consignment xxx.xx

X - Principal or Consignor xxx.xx
XXX Consignment of Goods xxx.xx
Received
X - Subaccount that corresponds xxx.xx

2. When accounting for the sale of goods received on consignment.

Count Description of Accounts and Subaccounts Partial Must News

135 Short-Term Accounts Receivable xxx.xx

X - Type of Currency xxx.xx
 Deposits

XX - Clients xxx.xx
900 Sales xxx.xx
X - Type of Currency xxx.xx
30
3. When establishing the cost of the sale made.

Account Description of Accounts and Subaccounts Partial Must News

810 Cost of Sales xxx.xx

X - Corresponding sub-account xxx.xx
195 Inventory of Goods for Sale xxx.xx
X - Subaccount that corresponds xxx.xx

4. When setting the purchase and payment obligation to the principal or consignor.

Account Description of Accounts and Subaccounts Partial Must News

195 Inventory of Goods for Sale xxx.xx

X - Subaccount that corresponds xxx.xx
410 Accounts Payable to Suppliers xxx.xx
X - Type of Currency xxx.xx
XX - Principal or Consignor xxx.xx

5. Canceling the Control Order Accounts of the merchandise

received on consignment.

Count Description of Accounts and Subaccounts Partial Should News

XXX Receipt of Goods Consignment xxx.xx

X - Corresponding subaccount xxx.xx
XX - Corresponding subcontrol xxx.xx
XXX Goods Received on Consignment xxx.xx
X - Principal or Consignor xxx.xx

6. When paying for the purchase of goods to the consignor or principal.

Count Description of Accounts and Subaccounts Partial Must News

410 Accounts Payable to Suppliers xxx.xx

X - Currency Type xxx.xx
XX - Principal or Consignor xxx.xx
110 Cash in Bank xxx.xx
X - Type of Currency xxx.xx
XX - Bank Account xxx.xx
 Deposits

31

CONCLUSION
 Deposits

32

BIBLIOGRAPHY

REDONDO, A. Practical Course in General and Advanced Accounting. Center

Venezuelan Accountant. Third edition. Venezuela pages 712.

KESTER, R. Accounting, theory and practice, Principles of accounting. Ninth

Edition. Labor Publishing, S.A. Pages 457.

López Yustos, Pedro; Guajardo, Gerardo; Woltz M., Phebe and Richard T. Arlen
Accounting. McGraw-Hill Publishing.
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33