Goods Receipts Accounting

Updated On : Feb 08th, 2024 | 23 min read

The more inventory a company has, the less likely they will have what they need

Stock refers to the value of all available finished goods directly sold to customers. It helps determine business revenue and is an essential asset for any organisation. Stocks are either manufactured in-house or procured from suppliers.

A typical procurement process starts with a purchase request, which is an internal document providing the requirements for materials to the buyer in the purchasing department. Purchase requests can be placed by different departments in an organisation. The buyer then converts the purchase request to a purchase order based on past supplies or new bids.

The supplier then delivers the goods to the buyer. The goods receipt is the document that records the incoming goods and stores the materials in the inventory. Some companies also conduct inspections (quality control of goods) before accepting the stock into their inventory.

The Goods Receipt performs the following tasks:

1. Increases the inventory for the materials in the specified warehouse or location.
2. Posts the accounting entries to the ledger.