depends on purchase, if it is a consumable spare then consume as expenditure and becomes nominal and a capital or insurance spare then capitalise it and becomes real account, refer accounting standard interpretation 10 for AS-2 and AS-10

Asma ali

Student

39 Points Joined July 2016

Purchase is a nominal account while goods is a a part of real account...

bhavani shanker

article

82 Points Joined July 2014

Don't worry! here is the answer

under american Approach or modern approach

purchase of goods --->means goods coming inside ,increase in stock(asset) belongs to real account

under British Approach or Double Entry System

purchase of goods --->treated as expense(nominal) because purchases should transfer to trading p&l account, now you need to decide whether it should be in trading p&l or not

CA Srujann kumar Reddy

Asst Manager(Internal audit)

1679 Points Joined May 2011

good one bhavani shankar, Thanks for sharing, so we follow the second one.

Kanak

CA Final

106 Points Joined March 2009

Dear Kushwanth,

Purchase Account is Nominal Account. Purchases are treated as expenses. As per Golden Rules of Accounting for Nominal Accounts (i.e., Debit all expenses and losses, Credit all incomes and gains), we debit purchase account because it is an expense. One should not be confused between Purchases and Stock. Stock Account is real account. Trading Account reflects adjusted purchases.

Stock is unspent purchases or Unsold Output.