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A GR/IR (goods-receipt/invoice-receipt) clearing account is a bookkeeping device that can be used when goods arrive before the invoice is generated, or when an invoice arrives before the goods are delivered.
In the normal course of business, discrepancies often (if not usually) exist between goods receipt and quantity invoiced for a purchase order. These differences produce an artificial debit or credit balance. The GR/IR clearing account checks the quantity of goods received against the quantity of goods invoiced and then posts a positive or negative balance accordingly. The GR/IR clearing account thereby serves as a "buffer" between the inventory account and the vendor account, minimizing confusion and reducing the risk of accounting errors.
A GR/IR account should be cleared at regular intervals, such as at the end of every fiscal year.