Goods Received Note (GRN)

What is a Goods Received Note (GRN)?

A Goods Received Note (GRN) is a document used to record the receipt of goods by a business. It serves as proof of delivery and provides a detailed account of the items that have been delivered, which aids in inventory management and financial accounting. GRNs are typically used in conjunction with purchase orders and invoices to ensure that the correct items have been received in the right quantities and in acceptable condition.

Key Components of a GRN

Date of Receipt: The date when the goods were received.
Purchase Order Number: A reference number linking the GRN to the relevant purchase order.
Supplier Information: Details of the supplier including name and contact information.
Description of Items: Quantitative and qualitative description of the received goods.
Quantity Received: The actual quantity of items received.
Condition of Goods: Notation of the condition of the goods upon receipt.
Signature: Signatures of personnel who verified and accepted the goods.

Importance of GRN

Verification: Ensures the goods received match the purchase order.
Inventory Management: Updates inventory records for accurate stock levels.
Accounting: Facilitates proper financial recording and audit trails.
Payments: Acts as a supporting document for processing supplier payments.

Example Scenarios

Example 1

A retailer receives a shipment of 100 units of office chairs ordered from a supplier. Upon receipt, the warehouse manager checks the quantity and condition of chairs and fills out a GRN containing all necessary details. The GRN is then matched with the purchase order and stored for accounting records.

Example 2

A manufacturing company receives a batch of raw materials. During the unpacking process, the staff identifies some damaged items. The GRN is filled out noting both the received and damaged quantities. The company uses this GRN to dispute the partial shipment with the supplier.

Frequently Asked Questions (FAQs)

1. Why is a GRN important in inventory management?

A GRN is vital as it provides a formal record of goods received, helping maintain accurate inventory levels and ensuring that the correct items in the right quantities are added to stock.

2. What should be done if there are discrepancies between the GRN and the purchase order?

Any discrepancies should be promptly reported to the supplier for resolution. The GRN will act as supporting documentation for any claims or disputes.

3. How does a GRN impact accounting?

A GRN is used to update inventory records and reconcile supplier invoices, ensuring that financial records accurately reflect stock levels and the cost of goods received.

4. Can a GRN be generated electronically?

Yes, many modern inventory management systems and ERP solutions provide the capability to generate and store GRNs electronically, enhancing efficiency and record-keeping.

5. Is the GRN used for services received?

Typically, a GRN is used specifically for physical goods rather than services. Services received would be tracked and documented separately, usually through service logs or timesheets.

6. Who is responsible for signing a GRN?

Usually, the warehouse manager or inventory controller is responsible for verifying and signing the GRN, confirming that the goods have been received as specified.

Purchase Order (PO): A document issued by a buyer to a supplier indicating the types, quantities, and agreed prices for products or services.
Invoice: A document issued by a seller to a buyer, indicating the products, quantities, and agreed prices for products or services the seller has provided the buyer.
Delivery Note: A document that accompanies a shipment of goods, providing a detailed list of goods being delivered without listing the prices.
Bill of Lading: A legal document issued by a carrier to acknowledge receipt of cargo for shipment.
Stock Keeping Unit (SKU): A unique identifier for each product or service that can be purchased.

Online References

Suggested Books for Further Studies

“Principles of Accounting” by Needles Powers, and Crosson
“Inventory and Production Management in Supply Chains” by Edward A. Silver, David F. Pyke, and Rein Peterson
“Accounting for Managers: Interpreting Accounting Information for Decision Making” by Paul M. Collier
“Management Accounting” by Anthony A. Atkinson, Robert S. Kaplan, and Ella Mae Matsumura

Accounting Basics: Goods Received Note (GRN) Fundamentals Quiz

### Which primary purpose does a Goods Received Note (GRN) serve? - [ ] To order products from a supplier. - [x] To record the receipt of goods. - [ ] To summarize sales transactions. - [ ] To evaluate supplier performance. > **Explanation:** The primary purpose of a GRN is to record the receipt of goods. It ensures that the items received are properly documented and match the purchase order. ### Who typically signs the Goods Received Note? - [ ] The seller - [ ] The accounts payable clerk - [ ] The customer - [x] The warehouse manager > **Explanation:** The warehouse manager or an inventory controller usually signs the GRN to confirm that the goods have been accurately received and checked. ### What information is NOT typically included in a GRN? - [ ] Date of receipt - [ ] Description of items - [x] Supplier's bank account number - [ ] Quantity received > **Explanation:** A GRN typically includes information about the date of receipt, description of items, and quantity received, but not the supplier's bank account number. ### Why is a GRN important for inventory management? - [x] It ensures that stock records are accurate. - [ ] It determines the pricing strategy. - [ ] It records cash flow. - [ ] It is used for external audit purposes only. > **Explanation:** A GRN is crucial for maintaining accurate stock records, which are essential for effective inventory management. ### When multiple items are received from different suppliers at the same time, how should GRNs be created? - [ ] Create one GRN for all items received. - [ ] Do not create a GRN. - [x] Create separate GRNs for each supplier’s goods. - [ ] Only note the most valuable items. > **Explanation:** Separate GRNs should be created for each supplier’s goods to ensure accurate tracking and reconciliation. ### What should be done if there is a discrepancy between the GRN and the purchase order? - [ ] Ignore the discrepancy. - [ ] Accept the goods and move on. - [x] Report the discrepancy to the supplier. - [ ] Return all the goods immediately. > **Explanation:** Any discrepancies should be reported to the supplier for resolution. ### Which of the following is not a function of the GRN? - [ ] Verify goods received. - [ ] Help in reconciling invoices. - [ ] Update inventory records. - [x] Forecast sales trends. > **Explanation:** The GRN verifies goods received, helps in reconciling invoices, and updates inventory records but does not forecast sales trends. ### Can a GRN be used as supporting evidence for supplier payments? - [x] Yes - [ ] No > **Explanation:** Yes, a GRN can be used to support supplier payments by confirming that the goods have been received as per the purchase order. ### Which department is not typically involved in the GRN process? - [ ] Inventory/warehouse - [ ] Accounting/finance - [ ] Purchasing - [x] Marketing > **Explanation:** The marketing department is not typically involved in the GRN process, which primarily includes inventory, accounting, and purchasing departments. ### What is often a related document that accompanies a GRN? - [ ] Marketing Plan - [ ] Tax Return - [ ] Customer Feedback Form - [x] Purchase Order > **Explanation:** A Purchase Order often accompanies a GRN to provide a reference for what was originally ordered.

Thank you for joining this comprehensive journey into Goods Received Note (GRN). Keep progressing in mastering your inventory and supply chain management skills!