Similarities & Differences Between Income And Purchases

The price of goods / products sold or services rendered to customers is called Revenues or Incomes while goods purchased are called Purchases.

There are two types of revenues i.e., Direct Revenue and Indirect Revenue. Purchases includes Cash Purchases and Credit Purchases.

Revenues are recorded in Income Statement or Trading & Profit And Loss Account while Purchases are recorded in Income Statement or Trading Account.

Similarities Between Revenues And Purchases

Both are Temporary Accounts which are closed at the end of the accounting period.

Direct Revenue i.e., Sales and Purchases are used to calculate Cost of Sales or Cost of Goods Sold for the accounting period