1. THE SYSTEM OF ACCOUNTING Volume III WRITTEN BY: SYED AQEEL RAZA MASTER OF COMMERCE & POLITICS
2. PURCHASES 1 ACCOUNTING FOR PURCHASES The purchase is the result of exchanging values for material and work by means of money or its equivalent for the satisfaction of need and for generating profit in business by the process of purchasing and selling. There are three types of businesses involve purchases and sells as in trading business, the person purchases goods and sells it in anticipation of gain, in manufacturing business, the concern purchases materials, gives it any shape and sells and in services business which has no purchase apparently but actually the services which are given to service provider are the purchases for which the concern who does purchase the services pays money to service provider. The purchases for business is considered a kind of temporary asset involve in profit and loss under income statement. It may also be said a kind of expense because of purchasing for goods or expense for goods involves in the cost of goods sold and can also say it the helping tool for generating profit. Purchase plays an important role in accounting.