What Are Credit Purchases In Accounting - Explanation With Examples
Credit Purchases (CP) Definition And Meaning Credit means in Purchases is that you buy goods without paying to seller and agree with him to make payment within the specified time period. When goods are purchased by the business on Credit or on Account for reselling purposes, then we can say that Credit Purchases take place in Accounting. Like Purchases , credit Purchases i nclude both services and supplies but these are created on account or credit. Due to it, two parties Accounts Receivable and Accounts Payable are created that is a Current Liability for the buyer who will pay to seller or supplier after specified time period From the point view of buyer’s business, he records CP while from seller or supplier’s business it is a Credit Sales and record Accounts Receivable as a Current Asset in the Accounts Receivable Subsidiary Ledger . CP Journal Entry Example: Let say that Mr. A purchased 2 tables from Mr. B for Rs. 10000 (Each Rs. 5000) on account...