Glossary · Purchases and payables
Purchase order (PO)
A purchase order is a document a business sends a supplier to order goods or services at an agreed price and quantity. It is a commitment to buy, not a bill, so it posts nothing to the books. The accounting happens when the goods are received and the supplier's bill arrives.
Glossary / Purchase order
How it works
A PO gives both sides a written record of what was ordered. When the delivery arrives, you check it against the PO. When the bill arrives, you check that too. This three-way match, order against receipt against bill, catches short shipments, wrong prices and bills for goods that never came.
Because a PO is only a promise, it has no effect on accounts payable, inventory or expenses. It does matter for planning: open POs show what stock is on its way and what cash will be needed to pay for it.
Worked example: A PO received in two deliveries
A bike shop orders 20 helmets at $35 each, $700 in all, on PO 1042. Nothing is posted.
The first delivery brings 12 helmets. The shop receives them against the PO: inventory goes up by $420 (12 × $35). The PO shows 8 helmets still to come. When the last 8 arrive with the supplier's bill, inventory goes up another $280 and accounts payable totals $700.
| Helmets | Value | |
|---|---|---|
| Ordered on PO 1042 | 20 | $700 |
| First delivery | 12 | $420 |
| Second delivery | 8 | $280 |
In AcboBooks
In AcboBooks, a purchase order posts nothing and shows as on order on the Stock Status report. It can be received in part or in full, per line, either as an item receipt (goods arrived, no bill yet) or as a bill. Its status moves from open to partly received to received.
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Updated October 25, 2026. General information, not tax, legal or accounting advice. Rules and rates change; check with the IRS, the CRA, your state or province, or your accountant.
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