Purchase Day Book in Accounting
In the scope of accounting, accounts of primary entry and accounts of secondary entry are the two types of accounts. Among the books of primary entry, we have some specialized books, and we name these as subsidiary books. Among these subsidiary books, a very important kind is the purchase journal or the purchase day book. There are several types of purchase day books namely purchase journal, purchase day book, the book of the invoice, bought book, etc. It is an original entry book. This article will look into the definition, the format of purchase day book, advantages of purchase day book, solved examples, etc.
Meaning of Purchase Day Book
The purchase day book is a subsidiary book that records those credit purchases of a firm, which the firm shall resell. Therefore, no cash transactions are a part of a purchase journal. Such trades are a part of the cash book. Any transaction which the business doesn't mean to resell is not made a part of the purchase book.
For instance, a piece of machinery purchased on credit will not find a place in the purchase book but rather in a journal. When the accountant records all the entries properly, he/she calculates the total at the end of a week or month. This value shows the total amount of credit transactions for that specific period. This amount of money gets debited from the purchase account of the firm, and the credit goes to the accounts of the sellers individually.
Format of Purchase Day Book
The format of the purchase day book is as follows:
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As you can see, the format of the purchase book consists of five columns and is a tad bit different from an ordinary journal. The foremost column is the one concerning the date of purchase. The next column is the one for the particulars of the purchase, which in this case is the name of the supplier. One can also put in other details like the number of goods bought or the price of the goods, etc. The third column reads L.F., which refers to 'ledger folio' and the consecutive one is for the invoice number. These details are solely for reference information, as in the method of manual accounting, cross-referencing is an important element. The last column states the total amount that is due to the supplier for a particular transaction.
Advantages of Purchase Day Book
The following are a list of advantages of purchase daybook:
All the transactions concerning the goods bought on credit find a single place for the purpose of referencing, thus simplifying the process.
Important information regarding purchases doesn't get lost and are together in one place.
We don't need a separate narration or account titles for a purchase day book entry.
It facilitates the division of labour among the workers of the organization.
Now that the definition, format and importance of a purchase day book are clear, let us see a solved question on purchase day book followed by some frequently asked questions.
Solved Examples
1. PQR Ltd. runs a grocery store. The following is their list of purchases for November 2020. Draft a purchase daybook for these transactions.
20Kg potatoes bought from XYZ farms at Rs. 40 per kilo and a 5% trade discount
50Kg flour bought from EFG Co. at Rs.200 on credit
60 bags of rice bought from DEF Ltd. at Rs.600 each and a 10% cash discount
90Kg sugar bought from IJK Co. at Rs. 60 per kilo on credit
Answer:
Purchase Day Book
We do not consider the third transaction as the exchange was in cash and therefore, it will not be a part of a purchase day book.
Advantages
While working on a purchase day book, it provided some advantages over other types of record keeping which can be enumerated as follows:
All entries of purchases are kept as a record in one place, therefore, it is easy to refer to and browse through these entries to look up for any information.
All the important information regarding the transactions such as the number of items purchased or the amount of a product traded
FAQs on Purchase Day Book: Structure and Examples
1. What is a Purchase Day Book in accounting?
A Purchase Day Book, also known as a Purchase Journal, is a special purpose subsidiary book used in accounting to record all credit purchases of goods. It is a book of original entry, meaning transactions are recorded here first before being posted to the ledger. Importantly, it does not include cash purchases of goods or any purchases of assets.
2. What is the standard format of a Purchase Day Book as per the CBSE Class 11 syllabus for 2025-26?
The standard format of a Purchase Day Book includes the following columns:
Date: The date on which the purchase was made.
Particulars: The name of the supplier from whom the goods were purchased on credit, along with details of the items.
Invoice Number: The reference number of the source document (purchase invoice) received from the supplier.
Ledger Folio (L.F.): The page number of the supplier's account in the Purchase Ledger where the posting is made.
Details: The individual amount for each item purchased.
Amount: The final net amount of the transaction after any trade discounts.
3. What are the main advantages of maintaining a Purchase Day Book?
Maintaining a Purchase Day Book offers several advantages for a business:
Reduces Ledger Clutter: It prevents the General Ledger from becoming bulky with numerous individual purchase entries.
Easy Reference: Provides a chronological and detailed record of all credit purchases in one place, making it easy to look up information.
Division of Labour: Allows for the distribution of accounting work, as one person can manage the Purchase Day Book while others handle different subsidiary books.
Error Prevention: Segregating transactions reduces the chances of errors and omissions in the books of accounts.
4. How do you record a transaction in a Purchase Day Book? Provide a simple example.
To record a transaction, you enter the details into their respective columns. For example, if 'Modern Traders' purchases goods worth ₹5,000 from 'Sunil & Co.' on credit via Invoice No. 101 on April 5, 2024, the entry would be:
- Date: 2024 April 5
- Particulars: Sunil & Co.
- Invoice Number: 101
- L.F.: (Left blank until posting)
- Amount: ₹5,000
This simple entry captures all essential details of the credit purchase transaction.
5. How does a Purchase Day Book differ from a Purchase Account?
A common point of confusion for students is the difference between a Purchase Day Book and a Purchase Account. The key distinction lies in their function and nature:
Purchase Day Book: This is a book of original entry (a subsidiary book) where individual credit purchase transactions are recorded in detail as they occur.
Purchase Account: This is a ledger account in the General Ledger. It does not show individual transactions but rather the periodic total of the Purchase Day Book, which is posted to its debit side. The book records the 'story', while the account shows the 'summary'.
6. Why are cash purchases of goods and any purchase of assets not recorded in the Purchase Day Book?
This is a crucial rule based on the specific purpose of the Purchase Day Book:
Cash Purchases: All transactions involving cash (or bank) are recorded in the Cash Book. Recording a cash purchase in the Purchase Day Book would violate this principle and lead to double-counting.
Purchase of Assets: The Purchase Day Book is exclusively for recording the purchase of 'goods'—items a business deals in for resale. The purchase of an 'asset' (like machinery, furniture, or a vehicle) is a capital expenditure. If purchased on credit, it is recorded in the Journal Proper, not the Purchase Day Book.
7. What is the difference between a Purchase Day Book and a Purchase Return Book?
Both are subsidiary books but track opposite transactions. The Purchase Day Book is used to record all goods that a business buys on credit from its suppliers. Conversely, the Purchase Return Book (or Returns Outward Book) is used to record all goods that the business returns to its suppliers, for which it receives a credit note.
8. How is the total of the Purchase Day Book posted to the General Ledger?
The process of posting connects the subsidiary book to the main ledger. At the end of a period (e.g., a month), the 'Amount' column of the Purchase Day Book is totalled. This total amount is then posted to the debit side of the Purchase Account in the General Ledger. Simultaneously, each individual supplier's account in the Purchase Ledger is credited with the amount of their respective transaction.
9. In what business scenarios is a columnar Purchase Day Book more useful than a simple one?
A columnar Purchase Day Book is highly beneficial for businesses that deal in a few distinct categories of goods. For example, a furniture store might have separate amount columns for 'Tables', 'Chairs', and 'Cabinets'. This format allows the business to easily track the total credit purchases for each product category directly from the book, which aids in inventory management and profitability analysis. A simple Purchase Day Book is sufficient for businesses with a wide, non-standard variety of goods where such categorization is impractical.
