What is Purchase?

Purchase on the other hand, is used in formal and technical context. It refers to the act of acquiring assets or goods for business or investment purposes. In financial reporting or accounting contexts, purchase may specifically refer to the acquisition of assets or investments that have been recorded on the company’s balance sheet. It can also be used in contractual agreements or legal documents to formalize the transaction.

Key features of Purchase are:

• Contractual Agreements: Purchases may involve formal contractual agreements between parties, outlining the terms and conditions of the transaction.
• Legal Documentation: Purchases often entail legal documentation, especially in the case of large transactions or acquisitions involving companies or businesses.
• Business Transactions: Purchases are common in business transactions where companies acquire assets, goods, or services for operational purposes or strategic reasons.
• Accounting Treatment: In accounting, purchases are recorded as transactions that affect the company’s financial statements, particularly the balance sheet and income statement.

Buy and Purchase are two terms of finance, which are used interchangeably. Buy refers to acquiring an asset, security, or financial instrument in exchange for money or other forms of payment; whereas, Purchase refers to acquiring assets or goods for business or investment purposes.