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Consignment Account - Invoice Price - Financial Accounting - By Saheb Academy - YouTube
Channel: Saheb Academy
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hi guys in the previous videos we have
seen how to solve consignment problems
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which we are based on the cost price now
in this video I am going to touch a new
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sub topic which is called as invoice
price so now what is invoice price
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invoice price means when
goods when goods are sent by the
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consignor by the consignor at a price at
a price higher than the cost price
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higher than the cost price the only term
which is very important here is price
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higher than the cost price for example
if the cost is hundred the invoice price
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would be higher than the cost would be
higher than the cost it would be 125 160
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etc etc okay so mathematically we can
put this definition into a formula which
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is invoice price equal to cost plus
profit if an item cost hundred and it
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it is invoiced
at 125 then it is obvious that there is
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an element of profit in it which is 25
in this case 25 percent of
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100 is 25 right so it is 125 so
invoice price is also called as the
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loaded price why because it is loaded
with profit so we call this as a load an
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extra which is loaded with the cost
price so the invoice price is also
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called as the loaded price all right
now let me explain you this invoice
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price with the help of a small example
okay let's say there is a consignor
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there is a consignor A and consignee
so now consignor a has 10 cycles he has
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10 cycles which costs thousand rupees each
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alright which cost thousand rupees each
so now he intends to send these cycles to
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the consignee so he sends them to the
consignee and along with the cycles
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along with the consignment he also sends
a Porforma invoice now what is
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porforma invoice is
nothing but a bill or an invoice a
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simple invoice okay so in that there is
description right there is description
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and there is price quantity so now what
the consignor does is the cycle
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cost thousand he writes the description
cycles and the price he increases the
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price he mentions the price 1200
and 10 quantity so this price mentioned in the
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Performa invoice or the bill is called
as the Invoice price so now the consignee
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he receives the ten cycles and he sees
the Performa invoice he sees the
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Performa invoice in which it is
mentioned that it caused 1,200
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1,200 so now what consignee thinks
that these cycles costs 1200 each
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1,200 each
he thinks this is the actual cost price
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but this is not the actual cost price
this is the invoice price so there is an
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element of profit in it which is invoice
price equal to
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which is Cost + Profit right so the
cost was 1,000 and he increased the
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price by 200 which is the invoice price
1,200 so there is an
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element of profit of 200 so
there is a profit of 200 but the
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consignee doesn't know that he thinks
that 1,200 is the
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cost and he tries to sell them at
1,200 or more okay this
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is the concept of the Invoice Price all
right
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