GR/IR Account Maintenance Process

March 3, 2009 by mySAP
Filed under: General Ledger Process

This refers to the process of posting period-end adjustments relating to stock-in-transit and provision for vendor.

Common Business Requirement

Goods and invoices are not always received at the same time. There is a need to track the accounts. At the time of goods receipt, the GR/IR account is credited and at the time of invoice receipt this account is debited.

AP/AR reclassification should be carried out after GR/IR account maintenance has been completed.

The same GR/IR clearing account is used during goods receipt and invoice verification. During goods receipt, the double entry is to debit stock account (or other accounts depending on what is purchased) and to credit the GR/IR account. During invoice verification, the double entry is to debit the GR/IR account and to credit the vendor account. Therefore, at the end of the period, if there is no outstanding delivery or invoice, the balance in the GR/IR account will be zero.

At period-end, the GR/IR reclassification program in the GL module should be executed. If the invoice is received before the goods are delivered, then the balance sheet adjustment account is credited and stocks-in-transit account is debited. If the goods are received before the invoice, then the balance sheet adjustment account is debited and provision for vendor account is credited

The sum of the GR/IR account and the balance sheet adjustment account should be zero if the reclassification has been carried out successfully. One possible reason if the sum is not zero is due to errors in the batch session of the reclassification program. If there is no error, it is possible that entries have been posted to the balance sheet adjustment account manually. In this case, the manual entry should be reversed.

Detail Analysis and Design

- Account Determination for Reclassification Program – Invoices Received but Goods not yet Delivered

Where invoices have been received but goods have not been delivered, the reclassification program will debit the stock-in-transit account and credit the balance sheet adjustment account.

- Account Determination for Reclassification Program – Goods Delivered but Invoices not yet Received

Where goods have been delivered but invoices have no been received, the reclassification program will debit the balance sheet adjustment account and credit the vendor provision account.