Something Funny With GR/IR Clearing?

[Former Member]

Hi,

I wonder why do we need an adjustment account to configure the automatic GR/IR clearing because all we want to do is transfer the balance from GR/IR account to the target account, to achieve this, can't we just credit the GR/IR and debit the target account or debit the GR/IR and credit the target account?

Why do we need the adjustment account then?

[Former Member · Accepted solution]

Hi,

Target account :

Goods received invoice not received: Liability account

Invoice received but goods not received: Asset account

Adjustment account : Replica of main GR/IR account

Please assign point as way of thanks

Thanks & Regards

D.K.Lakshmi Narayana

[Former Member · Accepted solution]

one last question, wht account is GR/IR, liability or asset? i think its liability right?

[Former Member · Accepted solution]

Hi Raj

GR/IR is liability.

When the Good is received the journal will be:

debit to inventory xxx

credit to GR/IR xxx

Logicly, when you received this goods, you haven't paid yet. So in nature the GR/IR represents the account payable estimation until the invoice received.

regards,

[Former Member]

ok i understand, however what will be the type of adjustment account asset or liability?

[Former Member]

Hi Raja,

In this GR/IR clearing account. System splits the open entries into 1) Goods received but invoice not received 2)Invoice received but goods not received. This entries it will post to adjustment account and target account. There will not be any postings to your regular gr/ir account. Since this purely at the date of balance sheet adjustment.

Hope this clarifies your doubt. Please assign point , as way of thanks.

Thanks & Regard

D.K.Lakshmi Narayana

[Former Member]

Hi Raj,

Normally GR/IR account is not allowed for direct posting. Allowing direct posting to this account can result in data inconsistency. It's dangerous. I think that's the reason why.

regards,