Business, Legal & Accounting Glossary

Definition: Purchase


Full Definition of Purchase

Purchase means to buy. It essentially grants purchasers ownership of a good or service in exchange for money. It can be termed as an economic agent’s demand for a commodity and for effective demand to materialize the presence of purchasing power is an important factor. Monetary income, price of a commodity, price of substitutes, tastes’ and preferences of consumers are some important determinants of demand (for a commodity). Purchase related jobs are available in supply chain management and logistics arena. Purchases aggregated for an entire nation is termed as aggregate demand in economics. Aggregate demand is a major determinant of a country’s price level.

Purchase can be broadly categorized into corporate purchases and consumer purchases. Consumer purchases involve economic discipline of consumer (buying) behaviour. Understanding the elements of customer decision-making is crucial for marketing personnel to design effective marketing programs.

Consumer Purchase Types

Consumer purchase decisions can be broadly classified as follows:

  • Minor New Purchase
  • Major Re-Purchase
  • Minor Re-Purchase
  • Major New Purchase

Online purchases have gained in popularity with today’s tech-savvy consumers.

Corporate Purchasing Orders

Some types of corporate purchasing orders are listed below.

  • Blanket purchase order
  • Standing purchase orders
  • Independent contractor purchase
  • Regular purchase orders
  • Order expiration notice

Business Purchase Types

Some types of business purchase categories are enlisted below.

  • Straight Re-Purchase
  • New Task Purchase
  • Modified Re-Purchase

Purchase Tax

It is an ad valorem tax, which is levied on consumer goods. Ad valorem literally means ‘as per value’. Purchase tax calculations are based on wholesale prices. A wholesaler pays this tax but transfers ‘burden of tax’ to retailers. They, in turn, pass it on to customers.

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
Modern Language Association (MLA):
Purchase. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. November 30, 2021 https://payrollheaven.com/define/purchase/.
Chicago Manual of Style (CMS):
Purchase. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/purchase/ (accessed: November 30, 2021).
American Psychological Association (APA):
Purchase. PayrollHeaven.com. Retrieved November 30, 2021, from PayrollHeaven.com website: https://payrollheaven.com/define/purchase/

Definition Sources

Definitions for 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: 27th March, 2020 | 7 Views.