What Are Cash Purchases - Definition And Meaning


Previously, we studied about Credit Purchases, but here we will learn about Cash Purchases in accounting.





Cash Purchases means goods purchased from our supplier or seller on Cash Basis. Is is recorded in Cash Book and it is the part of Total Purchases. It is categorized as Direct Expenses and recorded in Income Statment / Profit & Loss Account at the closing of Books of Accounts. We debit it when it incurs and credit when it is closed.




What Is Cash Purchases In Accounting With ExampleCash Purchases Journal Entry


Example: Suppose, Mr. A Purchased 5 Tables of total amount of Rs. 5000 For Cash from Mr. B for the purpose of selling, then it is a Cash Purchases and it is recorded in the Cash Book as shown below:



                                                      Purchases a/c   5000


                                                                            Cash a/c   5000


(5 Tables Purchased for Cash)

Comments

Post a Comment