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16CONSIGNMENT

The document discusses consignment stock in SAP MM. It defines consignment stock as material owned by a vendor but stored at the buyer's location. The key steps in the consignment cycle and accounting entries for goods receipt, consumption, and transferring stock to company ownership are covered. Differences between consignment and regular company stock are explained. The document answers 18 questions about managing and accounting for consignment stock in SAP.

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Sahil Sinha
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374 views

16CONSIGNMENT

The document discusses consignment stock in SAP MM. It defines consignment stock as material owned by a vendor but stored at the buyer's location. The key steps in the consignment cycle and accounting entries for goods receipt, consumption, and transferring stock to company ownership are covered. Differences between consignment and regular company stock are explained. The document answers 18 questions about managing and accounting for consignment stock in SAP.

Uploaded by

Sahil Sinha
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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SAP MM Interview Questions and Answers by B G Basetty & Rajendra G

CONSIGNMENT

1. What is meant by consignment stock?

A: Consignment stock is a special stock belongs to the vendor that is stored on your
premises. The vendor remains the legal owner of the material until you withdraw
material from the consignment stores.

2. What are the steps involved in consignment cycle?

A: The following steps are involved in consignment cycle:


 Make a IMG setting to activate consignment prices via info record
 Create an info record with consignment. In this info record you have to
maintain price of the vendor. You can also maintain conditions such as
discounts & price quantity scales.
 Create a PO with item category ‘K’. Set the GR indicator to ensure the
goods receipt to be posted to the consignment stores. Don’t set the IR
indicator to avoid the generation of invoice receipt. Also don’t enter the
net price.
 Make the goods receipt for the consignment material into consignment
stores with or without reference to a PO.
 Settle the liabilities towards the vendor which results from the removal of
consignment material from the consignment stores or transferring
consignment material to your own stock at predefined intervals.

3. What are the accounting entries when GR takes place for a consignment
order and also for consumption of consignment stock?

A: No accounting entries take place when GR take place for consignment material
because the material is still belongs to the vendor.
The following accounting entries take place for the consumption of consignment
stock:
 KON – Account payable – consignment sale
 GBB – Consumption, Raw material

4. What are the accounting entries for movement type 411K i.e., Consignment
stock to unrestricted stock?

A: The following accounting entries take place when you transfer consignment stock
to your own stock with movement type 411K:
 KON – Account payable – consignment sale
 BSX – Inventory Raw Material

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SAP MM Interview Questions and Answers by B G Basetty & Rajendra G

5. At what level of the organizational structure are consignment stocks


managed?

A: At Storage location level.

6. What are the differences between consignment stock and a company’s own
stock?

A: Consignment stock is stored by the company but is the property of the vendor
until it is consumed or transferred into your own stock. Vendor’s consignment
stock is managed separately from the company’s own stock.

7. What happens in the system when the consignment stock is withdrawn?

A: Consignment stock will decrease. The withdrawal is valuated using the relevant
vendor’s price for this material, and as a result of the withdrawal a liability is
incurred towards the vendor.

8. How is it indicated in the purchase order that a line item is being ordered for
consignment stock?

A: From the item category “K” assigned for the ordered item.

9. Consignment price for a vendor’s material is determined at what level of the


organizational structure?

A: Plant

10. Can a material with material type DIEN (Service) be purchased on


consignment? Why or Why not?

A: No, material with material type DIEN cannot be purchased on consignment,


because the material type must allow (quantity) materials management.

11. When is the vendor’s consignment price for a material entered into SAP?

A: Before posting goods receipt.

12. What happens to the following after a goods receipt into consignment stock?
Indicate increase, decrease or no change.

A: Valuated stock in material – No change


On hand quantity – Increase
Quantity available to MRP – Increase

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SAP MM Interview Questions and Answers by B G Basetty & Rajendra G

13. Under which stock type cans consignment stock is managed?

A: Unrestricted use consignment, Consignment stock in quality inspection &


Blocked consignment stock.

14. List two consignment inventory movements that would not produce an
accounting document?

A: Consignment stock type transfer (blocked to unrestricted, quality to unrestricted


and blocked to quality) and during consignment goods receipt.

15. When does consignment stock become due for payment to the vendor?

A: When consignment stock is issued for consumption or when consignment stock is


transferred to company’s own stock.

16. Describe the accounting transactions for consignment issue and consignment
invoice?

A: ISSUE (Issuing vendor’s consignment stock for consumption):


 DEBIT Consumption account.
 CREDIT “Liabilities from consignment stock” – Hits the liability clearing
account indicating that an ‘invoice’ from the consignment vendor is due.
INVOICE (Receiving the invoice from the consignment vendor):
 DEBIT “Liabilities from consignment stock” – Clear liability from the
clearing account
 CREDIT Vendors account – Set up a liability to the consignment vendor’s
account.

17. Why is the invoice for consignment consumption created without reference to
a purchase order?

A: There is no appropriate purchase order to reference because the stock in


consignment for a particular vendor could be the result of any number of purchase
orders.

18. When using consignment info records, what are two benefits over
consignment price segments?

A: Period specific consignment prices, discounts, etc.


Consignment price can be defined in any unit of measure.
Consignment price can be defined in foreign currency.

Page 83 of 127 Consignment

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