The Purchase Journal
With its business growth, the company (if a merchandising firm) may want to utilize a separate journal for all purchases on account. This would set up a payable which eventually will require a cash payment by the enterprise to 'payoff' the debt (most roads eventually lead to cash). Therefore, the cash disbursements department could be expanded to book all purchases on account since they will ultimately being issuing payment. A purchases journal would be used to record such purchases instead of using the general journal for such activity. This is referred to as the account payable cycle. As you are imagining, the general journal is getting even smaller.
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- John Templeton, HCCS Accounting Instructor
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