Difference between Purchase Book and Purchase Account:
What is a Purchase Account?
A purchase account is an asset that represents a liability in the form of goods or services purchased by a company. Purchase accounts are used to define what assets have been purchased and how much those assets cost, but also give companies the ability to show where they got the money for their investments.
For example, if you buy a computer for your business, you can record the purchase of that computer as an expense in the form of a cost object. Then, when you pay for it with cash or another asset, that transaction will show up on one of your accounts payable lines.
What is a Purchase Book?
A purchase book is a physical or digital record of all transactions involving purchases. Purchase books are used to track the cost and amount of each item purchased by a company, along with when the transaction occurred.
Purchase books also usually have information about what vendor was paid for those items as well as how much cash was used to pay for the items. Purchase books are useful in that they allow companies to quickly and easily find information about what they purchased as well as how much they paid for the item.
Purchase Book vs Purchase Account: What’s the difference?
- Purchase books and purchase accounts are not the same things.
- A purchase book is a record of purchases in your accounting system while a purchase account is an asset on the balance sheet that represents those items purchased as well as where you got the money to buy them.
- Purchase accounts are used to define the assets you have purchased, but purchase books show what those items were and how much you paid for them.
- Purchase accounts are not used to track your purchasing history, making purchase books an important record of all purchases made by a company.
- Purchase books are usually maintained by an accounting department since they do require some level of manual tracking, while purchase accounts can be set up in most accounting software programs and used automatically for each transaction.
- Purchase accounts are used to show the value of assets on your balance sheet while purchase books record how much you paid for those items and where that money came from.
- Purchase books usually have a place to list what vendor was paid, which is not recorded in purchase accounts.
- Purchase books are typically more detailed than purchase accounts, which simply show the amount of an asset that has been purchased by a company while purchase books also list information about what vendor was paid for those items and when the transaction occurred.
These are some of the main differences between purchase books and purchase accounts. Some of the information in a purchase book is recorded automatically when you set up those accounts, while some of that data has to be manually entered into your accounting system so it can be used by the software program.
Purchase books are also usually only maintained by an accounting department since they do require a level of manual tracking, but purchase accounts can be set up in most accounting software programs and used automatically for each transaction.
If you’re looking to use your purchase book more as an asset system, a record of what items you purchased, then a purchase account may be the better option for your business.