Purchase Order

A business raises a purchase order when it wishes to order goods from a supplier.  Details of quantities, prices and possibly delivery times are detailed on the document which is then sent out to the supplier.  A business often numbers it’s purchase orders so that it can be cross-referenced to the goods and invoice when they arrive.  A  business keeps a copy of the purchase order for itself.  If it is a larger business, a copy is sent to accounts and a copy is held by the purchasing department.

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4 responses to “Purchase Order

  1. Can PO be used for accrual?

  2. Yes, if the goods/services relate to the period you want to accrue for and it is just a case that you haven’t received or paid the actual invoice.

  3. Do PO consider as a source of document for bookkeeping/accounting?

  4. I don’t consider a PO to be a prime source document. The prime source document for a purchase is an invoice from the supplier (or sometimes, a receipt, where the goods where paid for on delivery/collection). In a small business, POs aren’t always used, as it would just add unnecessary admin, but where they are used, the bookkeeper/accounts dept would use them to confirm that the details on the invoice are correct. Therefore, I would consider a PO to be a secondary document, for bookkeeping/accounting as it isn’t essential that a business uses them.