What is the purchase ledger?

The purchase ledger is a subledger in which you record all purchases made by a business. It is useful for segregating into one location a record of the amounts the company is spending with its suppliers. The purchase ledger shows which purchases have been paid for and which purchases remain outstanding. A typical transaction entered into the purchase ledger will record an account payable, followed at a later date by a payment transaction that eliminates the account payable. Thus, there is likely to be an outstanding account payable balance in the ledger at any time.

If you were to maintain a manual record of the purchase ledger, it could contain substantially more information. The data fields in a manually-prepared purchase ledger might include the following information for each transaction:

• Purchase date
• Supplier code (or name)
• Supplier invoice number
• Purchase order number (if used)
• Identifying code for item purchased (could be item master code or the supplier's reference number)
• Amount paid
• Sales tax paid
• Payment flag (states whether paid or not)

The primary document recorded in the purchase ledger is the supplier invoice. Also, if suppliers grant a credit back to the business for such items as returned goods or items damaged in transit, then you also record credit memos issued by suppliers in the purchase ledger.

The information in the purchase ledger is aggregated periodically and posted to an account in the general ledger, which is known as a control account. The purchase ledger control account is used to keep from cluttering up the general ledger with the massive amount of information that is typically stored in the purchase ledger. Immediately after posting, the balance in the control account should match the balance in the purchase ledger. Since no detailed transactions are stored in the control account, anyone wanting to research purchase transactions will have to drill down from the control account to the purchase ledger to find them.

Before closing the books and generating financial statements at the end of an accounting period, you must complete all entries in the purchase ledger, close the ledger for that period, and post the totals from the purchase ledger to the general ledger.

Similar Terms

The purchase ledger is also known as the purchase subledger or purchase subaccount.

Related Topics

Control account
General ledger overview
What is a subsidiary ledger?
What is the accounts receivable ledger?