Purchase Return / Return Outward / Return to Supplier

Goods return to the supplier is called purchase return/ return outward/ return to supplier. Return of goods

may be due to defective or over purchased or any other reason.

For example: Ahmed return goods (Computers) to supplier.

Credit Purchases

Purchases of goods on account/ Credit are called credit purchases.

For example: Ahmed purchases Computers on the condition that he pays the amount Rs. 100,000 after 2 months.

Cash Purchases

Purchases of goods for cash are called cash purchases.

For example: Aslam purchase computers by paying cash Rs. 100,000.

Purchases

 Buying goods or merchandise from seller is recorded in books of accounts as purchases.

For example: Aslam purchase computers for Rs. 100,000.

Cash Purchases

Credit Purchases

Purchase Return / Return Outward / Return to Supplier

Merchandise / Inventory / Goods

Buying any things for resale purpose is called merchandise/inventory/goods.

For example: Buying computers for resale purpose then computers are merchandise/inventory.

Drawings

The cash or goods taken/withdraw from business for personal use are called drawings.

For example: Mr. Aslam withdraws Rs. 400 for personal use.

Entity Concept

Entity concept means that business has separate entity from its owner or proprietor.

For example: The investment of the proprietor is the liability of the business.