Concept – Overriding Commission
In the case of consignment accounts, the consignor pays a commission to the consignee in consideration of services rendered by the latter for selling the goods consigned. This commission may be either normal commission or special commission. Again, the special commission may be delcredre commission or over riding commission. Over-riding commission is an extra commission allowed to the consignee in addition to the normal commission. Such additional commission is generally allowed:-
i) To provide additional incentive to the consignee for the purpose of introducing and creating a market for a new product
ii) To provide incentive for supervising the performance of other agents in a particular area
iii) To provide incentive for ensuring that the goods are sold by the consignee at the highest possible price.
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