It is also known as a Purchase journal, Invoice book or Purchase daybook. Purchase book is a special purpose subsidiary book prepared by a business to record all credit purchases. Nowadays all these recordings occur in ERPs and only small firms resort solely to notebooks or MS-Excel.
Few things to note are,
- Purchases recorded are only for goods or items related to core business operations of a company i.e. goods procured for resale.
- Example – If a grocery business purchases office furniture it will not be posted in the purchases book as it is considered as “purchase of an asset” and not goods.
- Cash purchases are recorded in the cash book and credit purchases are recorded in purchase book.
Sample Format of Purchase Book
Related Topic – What is Cash Discount & its uses?
Prepare the purchases book of Unreal Pvt Ltd. from the following details.
Jan 7 – Purchased 10 Keyboards from ABC Co. for 300 each (for resale, invoice # 60)
Jan 24 – Purchased 5 headphones from XYZ Co. for 200 each (for resale, invoice # 75)
Purchases Book for Unreal Pvt Ltd.
The total purchases at the time of preparing the above records are 4,000 made from 2 companies ABC Co. (3,000) & XYZ Co. (1,000)
For Accounting Practice