ACCOUNTING
Volume III
WRITTEN BY:
PURCHASES 1
PURCHASES 2
three
kinds
of
PURCHASES 3
Drawing (Cash)/debit
Cash (credit)/asset
In case of drawing goods by owner, the
drawing reduces merchandise at the value to
Inventory account.
Drawing (Stock) /debit
Inventory (credit)
At the end of the period or in balance sheet the
drawing account is reduced by owners equity
or capital account as;
Capital (Cash)/debit
Drawing (Cash)/credit
Capital (Stock)/debit
Drawing (Inventory/Credit
PURCHASES 4
PURCHASES 6
TYPES OF PURCHSAES
All purchases revolve around cash purchases
and credit purchases and any purchase can be
made in cash or on credit.
- Cash Purchases
- Credit Purchases
The purchase against expense is the part of
income.
<THE SYSTEM OF ACCOUNTING < VOLUME III< SYED AQEEL
RAZA<aqeelraza@live.com>
PURCHASES 7
Cash Purchases
The cash purchase is the purchase which is
made on payment against getting anything on
the spot or exchange of value on the spot.
When a cash purchase is made, the following
double entry is made;
Purchases (Debit/Income Statement)
Cash (Credit/Asset)
PURCHASES 8
PURCHASES 9
support
PURCHASES 10
PURCHASE REQUISITION
In case of having no store for consumable
items, the purchases for departments are
made by purchase requisition and the purchase
requisition is the document which is prepared
before purchasing of anything either on cash or
on credit. It is an internal document which is
made by the person who wants to require the
item for his department and sends it to
purchase manager. The purchase manager
submits it to chief executive officer for
approval and on approval; he arranges to buy
the items required.
The purchase requisition may contain serial
number, description, quantity and cost
approximately which is prepared by the person
who wants to require the item or items for
machinery, repair, maintenance, etc. for
department and sends it to purchase
department duly signed by the departmental
head. The Purchase requisition will be checked
by purchase department.
The purchase
department also ascertains the cost of the item
or items approximately and submits gets it
approved for purchase.
<THE SYSTEM OF ACCOUNTING < VOLUME III< SYED AQEEL
RAZA<aqeelraza@live.com>
PURCHASES 11
PURCHASES 12
INDENT
Indent means to ask for consumable items
useable in office like printing, stationery, and
general items. It will be required in case of
having a store for these items.
The indent for issuing consumable items may
be specified below;
PURCHASES 13
REQUISITION
The requisition may relate to production which
requires raw materials, packing materials and
plant, machinery and building require repair
and maintenance.
The requisition may be designed as;
PURCHASES 14
JOB ORDER
PURCHASES 15
PURCHASES 16
PURCHASES 17
PURCHASE ORDER:
The
purchase
order
is
an
agreement between purchaser and
seller and states that the purchaser
indents to purchase goods and
confirm the legal identity of the
purchaser.
It
also
helps
in
comparison with purchase invoice
because of having column quantity,
description, unit price and the
value of goods. The deduction of
sales tax or any other instruction is
known by purchase order.
The purchase order is placed to
buy goods on credit subject to the
delivery order.
Purchase order means the agreement of
purchase.
<THE SYSTEM OF ACCOUNTING < VOLUME III< SYED AQEEL
RAZA<aqeelraza@live.com>
PURCHASES 18
PURCHASES 19
DELIVERY ORDER
order is a
document which confirms the
delivery of goods as per
purchase order. It requires the
receiving and checking of
goods by the purchaser.
The
delivery
PURCHASES 20
PURCHASES 21
PURCHASES 22
DEBIT NOTE
If any defect in commodities is found, the purchaser
will inform the supplier for deduction of the amount
payable by debit memorandum. If the supplier
accepts the request, he will issue a credit
memorandum for the deduction of amount
receivable.
The debit memorandum reduces the liability to
vendor and credit memorandum reduces accounts
receivable to the vendor.
PURCHASES 24
PURCHASES 25
KIND OF STORES
PURCHASES 26
CONSUMABLE STORES
In case of having Store for consumable items, it
must require stores where all general items
relating to building, plant and machinery, office
equipment and others in store 1 and stationery
or office supplies in store 2 must be
maintained. It depends on the volume of
business.
The benefit of maintaining stores for
consumable is to save time and money
because of purchasing small items in need
requires person to purchase it, the person
require time and money, and time and money
can be wasted for in shape of conveyance and
purchase from retailers for tiny items and time
which can be utilized in other works. Besides
time and money, the risk of handling cash is
minimized.
PURCHASES 27
PURCHASES 28
PURCHASES 29
PURCHASES 30
PURCHASES 31
PURCHASES 32
PURCHASES 33
WRITERS VIEW
The purchase involves transactions and
transaction is made through payment on cash
on the spot or on later. As soon as the purchase
occurs, the accounting cycle starts. The
purchase relates to the cost of goods which is
made after passing through many processes of
purchasing. The profit or loss is generated by
sale and purchase and purchase is the part of
profit and loss. In the services business, the
purchase is the service of a person acquired for
completing the job just like employees,
repairers etc.
The
stock
purchasing.
maintaining
is
because
of
WRITTEN BY: