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What is the purchase day book and give its format?
Accounts are divided into two types namely primary accounts and secondary accounts. In books of primary entry, there are special books called subsidiary books.
Purchase day book is a type of subsidiary book. Its main purpose is to record all business credit purchases (meant for resale). This book does not record purchase transactions (by cash) and purchases which are not meant for resale purchases.
Cash purchase transactions are recorded in the cash book. Balance is debited to purchase account and supplier of goods is credited to individual amounts. This book shows the total amount of credit purchases for a period.
Purchase book is also called a purchase journal/purchase book/invoice book etc. It is the book of the original entry.
The format of a purchase book is as follows −
|Date||Name of supplier||Ledger folio||Inward invoice number||Amount|
Details recorded in purchase book as per format are as follows −
- Name of suppliers − Particulars of suppliers etc.
- Ledger folio − This is for reference
- Invoice number − This is for reference
- Amount − Amount due to supplier.
The advantages of purchase book are as follows −
- All transactions related to goods on credit are maintained in one place.
- All entries are easy to browse and can be referred to easily.
- Information related to the number of goods, rate of purchases etc. are written in journals.
- Account titles/ explanatory narrations are not required.
- Enables division of labour.
- Explain the sales day book and give its format
- What is the return outward book and give its format?
- Explain the return inward book and give its format
- How to prepare a purchase day book?
- Differentiate between purchase book and purchase account
- What is a single column cash book and explain its format?
- What is a triple column cash book and explain its format?
- Explain double column cash book and its format
- Explain columnar petty cash books and give its format
- Compare asset purchase and stock purchase.
- How to prepare a sales day book?
- What is the difference between Book Value and Replacement Value?
- What is the process of Book Building and Price Discovery?
- Give an example of a triple column cash book
- Differentiate between Asset purchase method and stock purchase method