Purchase Book vs Purchase Account: Difference and Comparison

Key Takeaways

  1. A purchase book, called a purchase journal, is a crucial accounting record businesses use to track and record all their purchases.
  2. A purchase account is a fundamental component of a company’s accounting system, specifically used to track and record all transactions.
  3. A purchase book is a subsidiary book used to record all credit purchases of goods, while a purchase account is a ledger account that summarizes all credit purchases.

What is a Purchase Book?

A purchase book, referred to as a purchase journal or purchase ledger, is a crucial accounting record businesses use to track and record all their purchases of goods and services on credit. This financial document plays a significant role in maintaining accurate financial records and ensuring transparency in the company’s financial transactions.

The primary purpose of a purchase book is to maintain a systematic and organized record of all purchases made by a business. It includes details such as the date of purchase, the supplier’s name, a description of items or services acquired, the unit price, and the total amount.

The purchase book assists in managing credit purchases. Businesses can keep track of their outstanding liabilities to suppliers, enabling them to make timely payments and maintain good supplier relationships.

What is a Purchase Account?

A purchase book is a fundamental component of a company’s accounting system, specifically used to track and record all purchasing goods and services transactions. It is a ledger account that falls under the category of expense accounts in the general ledger.

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The purchase account records the cost of acquiring goods or services for resale, production, or operational purposes. This includes raw materials, inventory office supplies, and any other items purchased by the businesses. The cost is initially recorded in the purchase account as purchases are made.

It is an integral part of a company’s accounting system, enabling the systematic recording of purchases, managing liabilities and facilitating accurate financial reporting.

Difference Between Purchase Book and Purchase Account

  1. A purchase book is a subsidiary book used to record all credit purchases of goods, while a purchase account is a ledger account that summarizes all credit purchases.
  2. The purchase book has columns for date, particulars, invoice number, supplier’s name and the amount. In contrast, the purchase account has a ledger account with debit entries on one side and credit entries on the other.
  3. The purchase book provides a detailed breakdown of each purchase transaction, including supplier details and invoice numbers. In contrast, the purchase account summarizes all purchases into a single charge, providing a high-level view without individual transaction details.
  4. A purchase book helps maintain a detailed record of each purchase for reference, while a purchase account provides an overview of the total purchases made during a specific period.
  5. In a purchase book, it is easier to identify and correct errors in individual transactions. In contrast, in a purchase account, corrections involve adjusting journal entries rather than altering the purchase account directly.

Comparison Between Purchase Book and Purchase Account

ParametersPurchase BookPurchase Account
NatureA subsidiary book for recording all credit purchases of goodsA ledger account that summarizes all credit purchases
FormatIt has columns for date, particulars, invoice numberIt has debit entries on one side and credit entries on the other
Control over detailsA detailed breakdown of each purchaseSummarizes all purchases into a single account
PurposeMaintaining a detailed record of each purchase for referenceAn overview of the total purchases made during a specific period
Correction of errorsEasier to identify and correct errorsAdjusting journal entries rather than altering the purchase account directly
References
  1. https://journals.sagepub.com/doi/abs/10.1177/002224378502200110
  2. https://www.sciencedirect.com/science/article/pii/S1044500510000326
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Last Updated : 18 February, 2024

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56 thoughts on “Purchase Book vs Purchase Account: Difference and Comparison”

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