A ledger that records all purchases and expenses either paid in cash or credit for a particular period is known as Purchase Ledger. It is also known as a creditor control account or purchase ledger control account. It contains information of individual suppliers from whom the business has made purchases and expenses. It includes invoice entry, invoice payments and credit notes.

Purchase ledger requires all the invoices of the suppliers of the financial year. An Outsourced bookkeeper needs to confirm that all the documents and invoices are received by them. The quality of outsourced bookkeeping service is mainly based on data receipts from clients.


Purchase ledger is the form part of the Trading Profit and Loss Account while the Creditor control account is form part of the balance sheet. Purchase ledger helps the business in the following way:

  1. Tracking Purchase:
    It helps businesses tracking their purchase and inventory which makes sure that the business has enough amount of stock to meet its demand. It also ensures that no over purchase has been done during the concerned period.

    Purchase payments are an important part of any organisation. Payments made either in cash or by cheque are recorded in the purchase ledger. We can verify the payments made to the supplier in the cash book. Thus purchase ledger also helps in identifying appropriate payment made to suppliers.

  2. Aged Creditors Analysis:
    Purchase ledger includes a list of suppliers, date of purchase, tax no., and amount of purchase via the net, vat, and gross. This enables the business to identify their big and frequent suppliers and also amount payable to creditors by the business. The purchase control ledger account also helps in identifying the payment cycle to suppliers and aged creditors.

  3. Data Field:
    Recording of purchase ledger includes various data fields such as date of purchase, supplier’s name, invoice number, amount of purchase, amount of tax, account head, the amount paid or payable, etc.

    The data field is mainly used in the analysis and evaluation process. Each data field has its importance. E.g. To identify all payments of any supplier you can find it in the supplier column and have all the information.

  4. Reporting:
    The purchase ledger shows the recording of all business purchases and expenses. It helps managers to identify that expenses are recorded with proper accounting heads. Any error in the allocation of heads may lead to misreporting of financial statements. On verification of purchase ledger, we can ensure that the account head is recorded properly or not. In case the wrong allocation of the accounting head; reallocation entry need to be passed. 

    Accurate recording of purchase ledger ensures that the organisation is reporting the correct amount of Gross and Net profit.

  5. Tax Liability:
    The business mainly has two types of tax liability. VAT liability and Corporation tax liability.

    VAT Liability:
    Input VAT is a key factor while determining VAT tax liability. It is charged on vatable purchase and expense. Purchase ledger includes the recording of the tax amount of purchase, thereby supports in calculating input vat tax. A proper calculation of input tax enables the business to measure the correct VAT liability.

    Corporation Tax Liability:
    CT liability is calculated based on the net profit of the financial year. Recording purchases and expenses are of the utmost importance for calculating the net profit. If the net profit shows the correct amount then CT liability will also measure correctly and vice versa. Therefore recording all purchases and expenses is a vital process for all business organisations.