Which of the following indicates a consignment arrangement?

A consignment arrangement is characterized by the fact that ownership of the goods remains with the consignor (the entity sending the goods) until the goods are sold by the consignee (the dealer). In this scenario, the consignor maintains control over the goods, which means they have the authority to dictate what happens to the goods until they are sold, at which point ownership transfers to the buyer.

In this particular context, the correct answer emphasizes that the consignor retains control of the inventory until a sale takes place. This aligns perfectly with the fundamental principle of consignment, which is that the consignor’s ownership continues throughout the sales process, allowing the consignor to reclaim any unsold goods if necessary.

Recognizing the nuances of each choice clarifies why other options do not accurately define a consignment arrangement. For instance, full ownership being transferred upon delivery indicates a sale rather than a consignment, where ownership should remain with the consignor. Similarly, an unconditional obligation to pay suggests that the dealer has already made a purchase and therefore is now fully responsible for payment, contradicting the essence of a consignment where payment occurs after a sale. Lastly, a situation where the entity cannot reclaim unsold inventory would not represent a consignment, as the