Question

Answer the following in one sentence:
Explain the term net purchases.

Answer 1

Credit Purchases are recorded in books through purchase day book and cash purchases are recorded through cash book. The goods which are purchased may have some default and need to be returned to the supplier. It is called purchases returns.

While presenting the financials , a net purchase is shown in the trading account. This can be presented as:

To Purchases 55000

Less: Purchase returns 5000

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Net Purchases 50000

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