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. Cash 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 ...