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GR/IR CLEARING

Former Member
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Hi All,

What happens to the difference in GR/IR? I mean I know it gets cleared (zeroed) but what does clearing means here? Where does the difference amount go?

Reena.

Accepted Solutions (1)

Accepted Solutions (1)

Former Member
0 Kudos

Hi,

The normal sequence of business activities for procurement is as under:

1. Purchase Order is created - No accounting entries are posted.

2. Goods are received from Vendor. The accounting entry will be as under:

Dr. Inventory A/c.

Cr. GR/IR A/c.

3. Invoice is received from Vendor. The following accounting entry is posted:

Dr. GR/IR A/c.

Cr. Vendor A/c.

4. When payment is made to Vendor - the accounting entry will be:

Dr. Vendor A/c.

Cr. Cash / Bank A/c.

When GR/IR clearing is done the entries posted to GR/IR Account in step 2 and 3 will get knocked off. A debit and a credit are cleared, and a clearing document is posted. This clearing document will not have any line items.

GR/IR Account is managed onm open item basis and this is a good control mechanism to monitor pending invoices.

Thanks

Murali.

Answers (1)

Answers (1)

Former Member
0 Kudos

Hi

As you know the Gr/Ir account is a provisional account which is used when T code MIGO(Goods Receipt) and MIRO(Invoice Verification) happens.

In case of Goods Receipt scenario the vendor invoice is not received and the system takes the value from the PO.

Similarly in case of MIRO when the vendor invoice is received GR/IR account is Debited and the Vendor Account is credited. So ultimately the GR/IR account should be nullified.

In case the purchase value is accounted in Company code currency(Local Currency) there will not be any difference in both Dr and Cr balance of Gr/Ir account and if u will go to claer it there will not be any difference.

However in acse the PO is in Foreign currency ther may be difference in GR/IR account due to different Foreign Exchange rate.To avoid this situation when the G/L account is created in T code FS00 the box (Only balance in local currency) should be ticked so that while going for clearing there will not be any difference.

Hope I tried to clear your doubt.

Regards.

Surendra