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
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
, 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.