Credit Purchase

Business, Legal & Accounting Glossary

Definition: Credit Purchase


Quick Summary of Credit Purchase


A business entity takes delivery of goods or services and is allowed to make payment at a later date.



What is the dictionary definition of Credit Purchase?

Dictionary Definition


To purchase something with the promise that you will pay in the future.

When buying something on credit, you acquire the item immediately, but you pay for it at a later date.

Another name for credit purchases is to purchase something on account.


Full Definition of Credit Purchase


Credit Purchases in Accounting

When goods or services are bought by a business on account or on credit for reselling later, we can then say that Credit Purchases have taken place in accounting. As with purchases, credit purchases can be used to by goods and services however these are on credit or on the account.

Due to the credit purchase, an account receivable and an account payable are then created. The account payable is the current liability for the buyer, and they will pay the supplier at an agreed later date. The buyer should record it as a Credit Purchase.

From the viewpoint of the supplier, they should record it as an account receivable, it will be considered a current asset (for HMRC purposes they consider accounts receivable a current asset as if it has already been paid), and it should be recorded in Accounts Receivable Subsidiary Ledger.


Examples of Credit Purchase in a sentence


That section provides a detailed analysis of the process that market participants must undertake to enter into a Credit purchase or sales contract with Microsoft.
Payable is a liability that requires the purchaser to make a future payment on credit purchase.


Synonyms For Credit Purchase


purchase on credit

Credit Purchase FAQ's



Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/credit-purchase/
Modern Language Association (MLA):
Credit Purchase. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. July 11, 2020 https://payrollheaven.com/define/credit-purchase/.
Chicago Manual of Style (CMS):
Credit Purchase. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/credit-purchase/ (accessed: July 11, 2020).
American Psychological Association (APA):
Credit Purchase. PayrollHeaven.com. Retrieved July 11, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/credit-purchase/

Definition Sources


Definitions for Credit Purchase are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 16th February, 2020 | 9,611 Views.