Cash Book & Purchase Day Book

Hello All,

I am getting a little confused between the cash book and the Purchase Day book. When do I use them? I was hoping by now i'd be able to start understanding this course a little better by now but I am not :-( been studying since September but feel like I am going backwards more than forwards. I have my exam in June and it feels like it's getting here a little too fast for my liking!

When do i use the purchase day book? Is it these entries are if I sell something on credit? ie Bob buys a screwdriver off me it goes in there if he can't pay until next month?

Then the cash book is when Bob pays for the screwdriver?

Thanks x

Comments

  • sharumbasharumba Feels At Home Posts: 33Registered
    Hi,

    The purchases day book is used to enter "new purchases" from a supplier on credit. Ie You have just bought 30 screwdrivers from "Bob - The Screwdriver Company" on credit and you will pay for these next month.

    Bob then sends you an invoice which you enter into the Purchases Day Book and then from there you post the relevant entries into the main ledger DR Purchases & Vat - Cr Purchase Ledger Control. Also not forgetting to update subsidary purchase ledger.

    When the time comes to pay Bob for those screwdrivers then you will write the payment into the cash book and post the relevant entries to the main ledger (not forgetting the cash book forms part of the main ledger as well as a book of prime entry).

    Hope this helps.

    Shaun
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