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.
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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.