Types of purchases

Types of purchases Purchases are one of the important activities in the business. One can judge the importance volume of purchases transaction that separate primary entry books are maintained for purchase known as purchase journal.  Purchases transaction can be classified into three categories 1. Cash purchases Purchases are made by making full payment in cash. Purchases account is debit with full amount and cash or bank is credited with the amount appearing on bill. 2. Credit Purchases In Credit purchase the payment is deferred for future. In this case the purchases are debited and supplier account is credited and when payment is made then supplier account is debited and cash and bank account is credited. 3. Partly paid purchases In partly paid purchases some amount is paid at the time of purchase and balance amount is paid in future. In this case purchases are debit with full amount and cash and supplier account is credited for cash paid and cash to be paid in future respectively. Journal Entries Example of Different Type of Purchases ABC made a purchases of Rice of $ 200 on Cash Date Particulars Dr Cr Purchases A/C 200       Cash A/C 200 ABC made Purchases of Rice $ 300 from Aslam on Credit Purchases A/C 300       Cash A/C 300 3. ABC Co made purchases 400 from Waqar and made payment $ 200. Purchases A/C 400       Cash     A/C 200       Waqar A/C 200