Dictionary / On Consignment
What does On Consignment mean in accounting?
Quick definition
GeneralConsigned to another for the purpose of sale, display, or other use. This term guides how bookkeepers record, classify, and explain related transactions in routine financial reporting.
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Examples
Prints on your wall are not your stock
You run a small gallery. On May 7, a printmaker drops off 6 woodblock prints (she tags them at $175 each) for a weekend show you will sell at a 40% commission. They are on consignment: you do not own them, so do not add $1,050 to inventory or enter a bill to the printmaker. Log the six prints on a consignment sheet. When one sells, record commission income and an amount due the printmaker, not cost of sales from your stock.
Your cuffs leave, title stays with you
You run a jewelry bench. On July 19 you drop 14 stamped brass cuffs (your cost $11 each, $154) at a dry-goods shop for them to sell on consignment. Title stays with you, so do not invoice the shop or record a sale that day. Leave the $154 in inventory, or move it to a consigned-inventory account so you can see it is off-site. Record sales and cost of sales only when the shop reports which cuffs sold.
Why it matters
On consignment describes goods already in a consignment: they sit with someone else for sale, display, or another use, and title has not moved. You will not see this most months unless you regularly take other people's work or place your own stock in another shop; it shows up on an intake sheet or a drop-off receipt with no wholesale invoice. If you are holding the goods, they are not your inventory; if you sent your own goods out, they still are. Watch title, not location: mix the two and the balance sheet counts stock you do not own, or drops stock you still own.
Further reading
Compare this term with reference material from other accounting and finance websites.
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What is On Consignment in bookkeeping?
Consigned to another for the purpose of sale, display, or other use.
When should I use On Consignment?
Use On Consignment when the transaction facts match its definition and you need the ledger and financial statements to reflect the correct account and period.
What is a common mistake with On Consignment?
On Consignment is used for on consignment entries, while Offset covers a related but distinct bookkeeping purpose. Review both terms before posting unusual transactions. A common mistake is applying it by label only instead of checking the underlying transaction details.