Consignment Accounts, Meaning and Terminologies for SS 3

Class: SS 3
Term: First Term
Week: 5
Age: 14 years
Duration: 45 minutes
Subject: Financial Accounting
Curriculum Theme: Accounting for Special Transactions
Previous Lesson: Hire Purchase Accounts in the Hirer’s Books
Topic: CONSIGNMENT ACCOUNT;
Subject Matter: Meaning/definition; Terminologies; Preparation of account sales

Specific Objectives

By the end of the lesson, pupils/students should be able to:

Cognitive Domain

• Define consignment account.
• Identify and explain key terminologies used in consignment accounts.
• State the components of an account sales.

Psychomotor Domain

• Prepare a simple account sales document.

Social Domain

• Participate actively in class discussions regarding consignment transactions.

Reference Materials

The following resources were used in planning this lesson:

• 2025 Revised 9 Years Basic Education Curriculum
• Relevant State Unified Scheme of Work
• Financial Accounting for Senior Secondary Schools, Book 3
• The HeadTeacher Scheme of work

Instructional Materials

The teacher will teach this lesson with the aid of:

• Chart showing the format of an account sales
• Pictures depicting goods being sent on consignment
• Sample invoice documents
• Whiteboard and markers
• Textbooks

Rationale for the Lesson

This lesson provides students with foundational knowledge of consignment accounting, a common business practice. Understanding consignment accounts and related terminologies is essential for accurately recording and reporting financial transactions in specific business scenarios. It also builds practical skills in preparing financial documents like the account sales.

Prerequisite/Previous Knowledge

Students should have a basic understanding of general accounting principles, ledger accounts, and basic sales transactions.

Lesson Content/Board Summary

CONSIGNMENT ACCOUNT;

Meaning of Consignment Account

Consignment is an arrangement where one party (the consignor) sends goods to another party (the consignee) for sale on behalf of the consignor. The consignee sells the goods and remits the proceeds, after deducting agreed expenses and commission, to the consignor. The ownership of the goods remains with the consignor until they are sold to a third party.

Terminologies in Consignment Accounts

The following are key terms used in consignment accounts:

1. Consignor: The person or firm who sends the goods to another party for sale. The consignor remains the owner of the goods until they are sold.
2. Consignee: The person or firm who receives the goods from the consignor for the purpose of selling them on behalf of the consignor.
3. Consignment: The business transaction where goods are sent by the consignor to the consignee for sale.
4. Pro-forma Invoice: A document sent by the consignor to the consignee, detailing the goods sent, their quantity, and price. It is not a sales invoice as ownership has not yet transferred.
5. Account Sales: A statement prepared by the consignee and sent to the consignor, showing details of goods sold, expenses incurred, commission earned, and the net amount due to the consignor.
6. Commission: The remuneration paid by the consignor to the consignee for selling the goods. It is usually a percentage of the gross sales.
7. Del Credere Commission: An extra commission paid to the consignee for undertaking the risk of bad debts on credit sales. If del credere commission is paid, the consignee bears any loss from bad debts.
8. Consignment Expenses: Expenses incurred by both the consignor (e.g., freight, insurance) and the consignee (e.g., carriage inwards, storage, selling expenses) related to the consignment.

Preparation of Account Sales

The account sales is a statement prepared by the consignee and sent to the consignor. It typically includes:

1. Details of goods received.
2. Details of goods sold (quantity, rate, amount).
3. Expenses incurred by the consignee.
4. Commission earned by the consignee.
5. Any advances made by the consignee to the consignor.
6. The net amount due to the consignor.

Format of Account Sales

Account Sales

From: [Consignee’s Name and Address]
To: [Consignor’s Name and Address]
Date: [Date of Statement]
Regarding: Consignment of [Type of Goods] received on [Date]

Example 1: Preparation of Account Sales

Question: Mr. Emeka of Lagos consigned 100 units of televisions to Mr. Bala of Kano for sale. Each television was priced at ₦50,000. Mr. Bala sold 80 units at ₦55,000 each. He incurred storage expenses of ₦100,000 and selling expenses of ₦50,000. Mr. Bala is entitled to a 5% commission on gross sales. Prepare the Account Sales.

Solution:

Step 1: Calculate Gross Sales.

Gross Sales = Number of units sold × Selling price per unit

Gross Sales = 80 units × ₦55,000 = ₦4,400,000

Step 2: Calculate Commission.

Commission = 5% of Gross Sales

Commission = 5/100 × ₦4,400,000 = ₦220,000

Step 3: Prepare the Account Sales.

Account Sales

From: Mr. Bala, Kano
To: Mr. Emeka, Lagos
Date: [Current Date]
Regarding: Consignment of Televisions received on [Date]

Answer: The net amount due to the consignor, Mr. Emeka, is ₦4,030,000.

Teaching Methods/Instructional Techniques

Discussion, Explanation, Question and Answer, Guided Practice, Demonstration, Individual Practice

Instructional Procedures

Step 1: Introduction

Time: 5 minutes

Teaching Skill: Activating prior knowledge

Teacher’s Activity: The teacher introduces the lesson by asking students about different ways businesses sell goods, especially when they don’t have their own outlets in certain locations. The teacher then explains that today’s lesson will focus on a specific method called ‘consignment’.

Pupils’ Activity: Students respond to the questions and share their ideas about different sales methods.

Learning Point: Introduction to consignment

Step 2: Meaning of Consignment Account

Time: 8 minutes

Teaching Skill: Explanation/Definition

Teacher’s Activity: The teacher explains the meaning of a consignment account, emphasizing that ownership remains with the consignor until goods are sold. The teacher uses simple examples to illustrate the concept.

Pupils’ Activity: Students listen attentively, ask clarifying questions, and take down notes.

Learning Point: Definition of consignment

Step 3: Identification of Terminologies

Time: 10 minutes

Teaching Skill: Elucidation/Categorization

Teacher’s Activity: The teacher introduces and explains the key terminologies associated with consignment accounts, such as consignor, consignee, pro-forma invoice, account sales, and different types of commission (ordinary and del credere). The teacher uses a chart to display these terms.

Pupils’ Activity: Students identify and define the terminologies, asking questions for better understanding.

Learning Point: Consignment terminologies explained

Step 4: Components of Account Sales

Time: 5 minutes

Teaching Skill: Listing/Description

Teacher’s Activity: The teacher describes the various components that make up an account sales, referring to the format on the chart. The teacher highlights what information is included in this statement.

Pupils’ Activity: Students observe the chart and identify the components of an account sales.

Learning Point: Account sales components

Step 5: Demonstration of Account Sales Preparation

Time: 7 minutes

Teaching Skill: Demonstration/Guided Practice

Teacher’s Activity: The teacher demonstrates how to prepare a simple account sales using the example provided in the lesson content. The teacher guides students through each step of calculation and presentation.

Pupils’ Activity: Students observe the demonstration, follow the calculations, and ask questions where necessary.

Learning Point: Account sales preparation steps

Step 6: Guided Practice on Account Sales

Time: 5 minutes

Teaching Skill: Application/Problem Solving

Teacher’s Activity: The teacher provides a simple scenario and guides students to prepare another account sales on the board, encouraging their active participation in calculations and formatting.

Pupils’ Activity: Students actively participate in preparing the account sales, contributing to calculations and layout.

Learning Point: Practical account sales preparation

Step 7: Evaluation/Review

Time: 5 minutes

Teaching Skill: Questioning/Assessment

Teacher’s Activity: The teacher evaluates the learning by asking the following questions:

1. Define consignment account.
2. Mention three terminologies used in consignment accounts.
3. State any two components found in an account sales.
4. Who prepares the account sales?

Pupils’ Activity: Pupils answer orally and in writing.

Learning Point: Understanding consignment concepts

Step 8: Note-Taking

Time: 4 minutes

Teaching Skill: Guided Writing

Teacher’s Activity: The teacher guides pupils/students to copy the essential Board Summary notes, including the format and example of account sales, into their notebooks.

Pupils’ Activity: Pupils/students copy the notes carefully into their notebooks.

Learning Point: Recording lesson notes

Step 9: Conclusion

Time: 1 minute

Teaching Skill: Summarization

Teacher’s Activity: The teacher briefly reminds students about the importance of understanding consignment accounts in business transactions and encourages them to practice the preparation of account sales.

Pupils’ Activity: Students listen and prepare for the next lesson.

Learning Point: Consignment account importance

Continuous Assessment/Further Study

Type: Homework

Instruction: Answer the following questions in your notebook:

1. Explain the difference between a consignor and a consignee.
2. Mr. Obi of Enugu sent 50 bags of rice to Mrs. Ada of Port Harcourt on consignment. Each bag was valued at ₦30,000. Mrs. Ada sold 40 bags at ₦32,000 each. She incurred carriage expenses of ₦20,000 and marketing expenses of ₦15,000. Her commission is 10% on gross sales. Prepare the Account Sales to be sent to Mr. Obi.

Lesson Keywords

• Consignment – An arrangement where goods are sent for sale by one party on behalf of another.
• Consignor – The owner of goods who sends them for sale.
• Consignee – The agent who receives and sells goods on behalf of the owner.
• Account Sales – A statement sent by the consignee to the consignor, detailing sales, expenses, and commission.
• Commission – Remuneration paid to the consignee for selling goods.
• Pro-forma Invoice – A document detailing goods sent on consignment, not a sales invoice.

Differentiation

For weaker learners, the teacher will provide simplified examples and extra guidance during the preparation of the account sales, focusing on understanding each component. Faster learners will be challenged with additional scenarios involving del credere commission or goods returned by customers, requiring them to apply the concepts more deeply.

Suggested Lesson Videos

For further understanding of consignment accounts, students can search on YouTube for: consignment accounts meaning terminologies SS3

Teacher Guide for Using This Lesson Plan

Before the lesson, ensure you have a clear chart showing the format of an account sales and some simple numerical examples prepared. Begin by engaging students with real-life scenarios that relate to selling goods through agents. Clearly explain each terminology, reinforcing understanding with practical examples. When teaching the preparation of account sales, guide students step-by-step through the calculations and the format. Allow for guided practice and provide immediate feedback. Students should copy the Board Summary notes after the main teaching and practice activities, typically during Step 8. Pay attention to common errors in calculating commission or deducting expenses. Support struggling learners by simplifying the figures or providing partially completed formats, while challenging advanced learners with more complex scenarios.