Ainsworth & Co, Chartered Accountants and Business Advisors.

Purchase Ledger (or Accounts Payable)

The Purchase Ledger is frequently known as "Accounts Payable" or "Supplier Accounts" in accounting software.


The Purchase Ledger is your record of your purchases and expenses, whether or not you have paid them and how much you still owe.

On a Balance Sheet, the total unpaid bills will usually will be called Trade Creditors or Accounts Payable.

The Purchase Ledger has an Account for every Supplier. Such a Supplier Account carries all the transactions for the one Supplier:
• Purchase Invoices
• Purchase Credit Notes
• Payments Made

In Accounting Software, by recording these three types of transactions, you will get an immediate calculation of how much money you owe to other people and businesses.

The accounting software will also allow you to allocate or apply the money paid to the bill it relates to. These are then regarded as cleared. Then if you run an open items or unpaid bills report, you will see just the unpaid bills, rather than all the previous paid bills which is usually a much bigger report, and not frequently needed.

If trading is healthy, many of the Supplier Accounts will be carrying the balances which you owe at any given time, usually just the most recent unpaid purchase invoices.

As with all Accounts and Ledgers, the transactions will be recorded in Debits and Credits.

To make the accounting records complete, the Purchase Ledger has to be 'represented' in the General Ledger, even though they themselves are separate ledgers.

This is achieved by the concept of Control accounts. On the General Ledger there will be a Control Account for the Purchase Ledger.

Every time a transaction is recorded in the Purchase Ledger it is also recorded in the Purchase Ledger Control Account. This is the way that the General Ledger stays in balance.

Read the section on Accounting Controls for checks you can make on the Purchase Ledger.

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