Definition of Purchase:
Purchase refers to those goods which are bought with the intention of selling. This also means that purchases of non-current assets should not be part of purchases. Purchase includes both cash and credit purchases.
Types, Examples and T-Account of Purchase Transactions:
(1) Cash Purchase:
Cash purchase involves immediate payment of cash at the time of purchase. Following is example of cash purchase transaction:
Cash Purchase Transaction:
(2) Credit Purchases:
Credit purchase arises when payment for purchase of goods is not made at the time of transaction and is deferred to a future date.
Credit Purchase Transaction: