Purchase ledger

The purchase ledger is a subledger in which purchases are recorded. The purchase ledger is part of the accounting department's database; it is not maintained by the purchasing department. The ledger is useful for segregating into one location a record of the amounts a company spends 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 the purchasing volume is relatively low, then there is no need for a purchase ledger. Instead, this information is recorded directly within the general ledger.

If you were to maintain a manual record of the purchase ledger, it could contain substantially more information than was just indicated. 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. A credit memo may also be issued for a volume discount, though this credit may apply to a number of purchases in aggregate, and so cannot be traced back to an individual purchase transaction.

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 Courses

Bookkeeping Guidebook 
Purchasing Guidebook