Purchase Transactions in Accounting

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:

Purchase account

(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:

Credit Purchase