Purchases Debit or Credit is a business term used to describe the accounting process for purchases made on credit by a vendor. It is based on the concept of double-entry bookkeeping, meaning that each transaction must have an equal debit and credit entry. In other words, when you purchase something on credit, the vendor must include both a debit entry in the form of the purchase itself and a credit entry, which is the payment against the purchase. This can be tracked using basic double-entry bookkeeping software programs and it’s essential for businesses to properly track their purchasing activity. With Purchases Debit or Credit, business owners can easily determine the cash flow from their purchases and ensure that the accounts remain in balance.