There are a variety of reasons why particular businesses choose multiple tender types to pay debts.
At the most basic level, some vendors only accept cash or check, limiting the options for a business.
Also, some businesses are old school and won't buy what they are unable to pay for, leaving them with the cash and check option. Alternatively, some businesses recognize a need and will use credit to fulfill that need if the alternative is to lose business to competitors or to go out of business entirely.
Credit is a very important tool for businesses and allows businesses to increase their free cash flow by deferring payments. The two most used types of credit are supplier/vendor credit (where a company is invoiced and needs to pay the bill from 15 to 90 days later) and overdrafts (where a company writes checks that draw on a credit line after the cash in checking runs out).
The next most used types of credit include credit cards (where the business may earn rewards, miles or other points), working capital loans (similar to overdraft, but meant to cover the gap between getting paid and paying one's suppliers/vendors) and general loans.
Because it is easier than handing over a load of cash.
Some of the best credit cards for businesses are The Chase Ink Plus Card and The Simply Cash Business Card. Simply cash offers 5% cash back on office purchases and 5% cash back on wireless phone services. Chase Ink plus cards give money back on office suppy purchases, gas and grocery purchases.
[Debit] Purchases [Credit] cash / bank
Ideally, there would be no fees for cash advances and the same interest rate for all charges, both purchases and cash advances. (Some cards offer both of these features.)
A cash advance is when you borrow cash against your credit card. When you borrow cash you will usually pay a much higher interest rate than you would for purchases.
Debit Purchases Credit Cash
Because it is easier than handing over a load of cash.
Some of the best credit cards for businesses are The Chase Ink Plus Card and The Simply Cash Business Card. Simply cash offers 5% cash back on office purchases and 5% cash back on wireless phone services. Chase Ink plus cards give money back on office suppy purchases, gas and grocery purchases.
When Goods purchased on cash[Debit] Purchases xxxx[Credit] Cash/bank xxxxWhen purchased on credit[debit] purchases xxxx[credit] accounts payable xxxxWhen actual payment:[debit] Accounts payable xxxx[Credit] Cash / bank xxxx
Purchase journal is used to record "Credit Purchases" for resale purpose like supplies from suppliers and hence no cash purchases are recorded as cash purchases are recorded in cash payment journal.
[Debit] Purchases [Credit] cash / bank
If purchases are made on credit then accounts payable are created on the other hand if purchases are made on cash then there is no accounts payable created so both of these are not same but interrelated.
[Debit] Purchases [credit] Cash (partial) [credit] accounts payable (balance)
Increase in accounts payable will increase the cash inflow because if the cash is paid instead of credit purchases company has to pay cash which reduces the cash but as purchases has made on credit and no cash has to be paid that's why it has positive impact on cash flow.
Purchases Journal & Cash Payments Journal.Also called as Specialized Jounal Entries. Purchases Journals record transactions that involve purchases on credit. Source documents here would probably be invoices. The purchase of inventory on credit is recorded in the purchases journal. Cash Receipts Journal record transactions that involve payments received with cash Source documents would probably be receipts and cheque butts.
It depends on the credit card. Most of the time, cash advances are subject to a higher interest rate than purchases. Credit card interest rates are higher on cash advances. Check your card for specific details.
[Debit] Purchases xxxx [Credit] Cash / bank xxxx