In the consignment process, when does liability to the supplier arise?

In the consignment process, the liability to the supplier arises when goods are issued to a cost center. This is because, under consignment arrangements, the supplier retains ownership of the goods until they are used or consumed by the purchasing organization. Once the goods are issued to a specific cost center, it signifies that the purchasing organization has taken possession of the goods for operational use, leading to the recognition of a liability to the supplier for those goods.

While receiving goods at the warehouse signifies that inventory is on hand, it does not mean the purchasing organization has assumed financial responsibility for them yet. Inventory counting is primarily for record accuracy and does not trigger liability. Posting supplier invoices typically occurs after the goods have been utilized or consumed, which is aligned with recognizing liability for payment. Thus, the correct timing for the liability to arise in a consignment process is indeed upon the issuance of goods to a cost center.