The Formula For Purchases In Accounting is an accounting equation used to measure the total cost of goods purchased by a business. It serves as a quick reference point to determine how much money was spent on items during a given period of time. Essentially, it translates transactions from the balance sheet into useful information for the company. Put simply, the formula states that: Total Purchases = Beginning Inventory + Net Purchases – Ending Inventory. This effectively calculates the value of purchases, helping businesses maintain sensible budgeting practices and analyze where money is being spent.