Jun 042007
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.
4 Responses to “Purchase Order”
Comments (4)
Can PO be used for accrual?
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.
Do PO consider as a source of document for bookkeeping/accounting?
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.