Credit Purchases

Credit purchases are purchases a business makes now but pays for later.

A business will buy some goods on credit during the month.

This means the business is given time to pay for their purchases.

These goods come from a supplier.

To record a credit purchase, you credit the supplier’s account

This shows a value of goods or services came from the supplier.

Then you debit the relevant expenses account

This shows the money was used for that particular expense.

Later on, the business will make a payment to the supplier.

To record the payment, you credit the checking account.

This shows money came from the bank.

After this, you debit the supplier account.

This shows the money was sent to the supplier.

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