A purchase means to take possession of a given asset, property, item or right by paying a predetermined amount of money for the transaction to be completed successfully. In other words, its’ an exchange of money for a particular good or service. It is a routinely operation carried by both individuals and corporations. The purpose of this financial transaction is to transfer the ownership of a piece of property physical, intellectual, virtual or else. It is therefore a kind of expense and is hence included in the income statement within the cost of goods sold. Purchases may also include buying of raw materials in the case of a manufacturing concern or finished goods in the case of a retail business. However, in accounting, we have to differentiate between purchases as explained above and other purchases such as those involving the procurement of a fixed assets (e.g. factory machine or building). Such purchases are capitalized in the statement of financial position of the entity (i.e. recognized as assets of the entity) rather than being expensed in the income statement. To learn more about accounting basics, head onto our YouTube channel. We have started e new series poised towards accounting and commerce basics. Or visit https://youtu.be/bNQSdNjaAng. #commerceacademy #learningcommerce #academycommerce #goods #finishedgoods #accounts #accountingbasics #elearning #youtuber #youtube #accountingonline #staysafe #learncommerce #learnaccounts #basics #likeforlike #followforfollow https://www.instagram.com/p/CJTx5fHBSVF/?igshid=1sikfuxiryxid
