Glossary · Also called Creditors ledger
Purchases ledger
The ledger with one account for each supplier the business buys from on credit.
What it means
The subsidiary ledger of personal accounts for trade payables, recording how much is owed to each supplier.
Example
A business buying from a dozen suppliers keeps a dozen supplier accounts here, tracking amounts due to each.
Why it matters
Its accounts total to the purchases ledger control account, letting a book-keeper spot posting errors quickly.
In practice
The purchases ledger, or payables ledger, is a subsidiary ledger holding one memorandum account for each supplier. It is backed by the purchases ledger control account in the nominal ledger. Each supplier account is credited when an invoice is received and debited when the business pays or returns goods. A credit balance shows what is still owed.
For example, a supplier invoices RM1,000 and RM400 is later paid. The account shows a credit balance of RM600, which becomes part of trade payables in the statement of financial position. The sum of all supplier balances should agree with the control account, which checks the postings.
Do not confuse the purchases ledger with the purchases account. The purchases account in the nominal ledger adds up the cost of goods bought during the period and flows into the income statement. The purchases ledger records which suppliers are owed and how much.
If supplier accounts keep failing to agree with the control account, one of our teachers can help you find the error step by step. Book a trial class.
Related terms
Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.
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