It is also known as a Purchase journal, Invoice book or Purchase day book. A 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 cash book and credit purchases are recorded in purchase book.
Sample Format of Purchase Book
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)