What are the essential functions of a Purchase Book?

Purchase Book is also known as ‘Invoice Journal’ or ‘Bought Journal’ or Purchases Journal, is used for recording credit purchases of goods meant for resale. Cash purchases will not be entered in Purchases Book (to be entered in cash book) and credit purchases of goods not meant for resale viz., assets shall be entered in journal proper and not in the purchases book.

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Form of the Purchases Book: Usual Purchase book should have columns for date, invoice number, particulars, ledger folio, details and amount.

The Functions of Purchase Book are:

  • It gives at a glance, the total amount of credit purchases for a period.
  • It keeps detailed record of credit purchases.
  • It saves time and labour, as periodical totals can be posted to the purchases account in place of posting individual items.
  • It keeps the purchases account brief and tidy, as postings are made in condensed form.
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