Goods Received Note (GRN)

Definition

A Goods Received Note (GRN) is a document produced by a warehouse or receiving department within a business to verify goods have been received. The GRN includes detailed information about the items received, ensuring they match what was ordered in terms of specification and quantity. It’s pivotal for inventory management, as it helps track stock levels and is used in the reconciliation process between orders placed and goods received.

Detailed Elements of a GRN

Description of Goods: A detailed description of each item received.
Quantity: The number of units of each item received.
Commodity Code: A code assigned to goods for classification purposes, often used in larger organizations for simplified sorting and inventory tracking.
Date Received: The specific date when the goods were received.
Order Number: The reference number of the order corresponding to the received goods.

Examples

Manufacturing Company:
- A manufacturing company orders 100 units of raw materials.
- When the shipment arrives, the receiving department creates a GRN.
- The GRN details the specific materials, their quantity (100 units), commodity codes, the date they were received, and the related purchase order number.
- The GRN is then used for inventory updates and payment processing.
Retail Store:
- A retail store orders 50 units of a new gadget.
- Upon receipt, the store’s inventory manager checks and creates a GRN.
- The GRN includes the number of gadgets received, their specifications, the date, and references the purchase order.

Frequently Asked Questions

Q: Why is a GRN important in procurement? A: A GRN is important because it ensures that the goods received match what was ordered in terms of quantity and quality. It acts as a verification document for the accounts and inventory departments and supports accurate financial records.

Q: What happens if the goods received do not match the specifications on the GRN? A: If there’s a discrepancy, the receiving department will typically notify the supplier and the procurement team. A record of the discrepancy is maintained, and actions such as returning the goods or requesting a replacement are initiated.

Q: Can a GRN be generated digitally? A: Yes, many modern businesses use electronic systems to generate GRNs. Electronic GRNs streamline the process, reduce paperwork, and integrate directly with inventory management and accounting systems.

Q: Who is responsible for filling out the GRN? A: The receiving department, warehouse staff, or inventory personnel are generally responsible for filling out the GRN after verifying the received goods against the order specifications.

Q: Is a GRN used for services as well as physical goods? A: Typically, GRNs are used for physical goods. For services, businesses might use Service Entry Sheets (SES) or other documentation specific to service verification.

Invoice: A document issued by a seller to a buyer indicating items sold, prices, date of shipment, delivery, payment terms, and other information.
Purchase Order (PO): A commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services.
Delivery Note: A document accompanying a shipment of goods listing the products within the delivery but not the prices.
Stock Card: A card used in inventory management that records the quantity of stock on hand.
Receiving Report: A detailed report documenting goods received from suppliers, including details such as quantities and conditions.

Online References

Suggested Books for Further Studies

“Supply Chain Management: Strategy, Planning, and Operation” by Sunil Chopra, Peter Meindl
“Fundamentals of Supply Chain Management: Twelve Drivers of Competitive Advantage” by John T. Mentzer
“Operations Management: Processes and Supply Chains” by Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman
“Purchasing and Supply Chain Management” by Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Accounting Basics: “Goods Received Note (GRN)” Fundamentals Quiz

### A Goods Received Note (GRN) is primarily used to: - [ ] Place orders for goods. - [x] Confirm and record the receipt of goods. - [ ] Schedule shipments to customers. - [ ] Determine pricing for products. > **Explanation:** A GRN is used to confirm and record the receipt of goods, ensuring that what was ordered matches what was received in terms of quantity and specifications. ### What key detail is NOT typically included on a GRN? - [ ] Description of goods - [ ] Quantity received - [ ] Date received - [x] Price of goods > **Explanation:** The GRN generally does not include the price of goods; it is focused on the receipt details such as description, quantity, and date received. ### Who is responsible for filling out a GRN? - [x] Receiving department/warehouse staff - [ ] Sales team - [ ] Marketing department - [ ] Customer service team > **Explanation:** The receiving department or warehouse staff are responsible for filling out the GRN after verifying that the received goods match the order specifications. ### In which scenario is a GRN issued? - [ ] Upon the payment of an invoice - [x] Upon the receipt of ordered goods - [ ] During a sales meeting - [ ] When creating a budget > **Explanation:** A GRN is issued upon the receipt of ordered goods to verify and record the items received. ### What is the main purpose of a GRN in inventory management? - [ ] To create financial statements - [x] To ensure accurate tracking and reconciliation of inventory - [ ] To approve supplier contracts - [ ] To manage employee payroll > **Explanation:** The GRN ensures accurate tracking and reconciliation of inventory by recording the details of the goods received. ### If the GRN shows a discrepancy in the received goods, the next step is to: - [ ] Ignore the discrepancy - [x] Notify the supplier and procurement team - [ ] Issue a GRN for correct goods only - [ ] Adjust the inventory records silently > **Explanation:** If there is a discrepancy, the supplier and procurement team must be notified to resolve the issue, either by returning goods or requesting a replacement. ### How does a digital GRN benefit modern businesses? - [ ] It increases paperwork. - [ ] It replaces physical inventory. - [x] It streamlines the process and integrates into systems. - [ ] It creates manual entries. > **Explanation:** Digital GRNs streamline the process and integrate directly with inventory management and accounting systems, reducing paperwork and manual errors. ### A GRN helps in financial reconciliation by: - [ ] Determining the market value of goods - [ ] Approving sales discounts - [ ] Calculating tax returns - [x] Matching received goods with purchase orders > **Explanation:** The GRN helps in financial reconciliation by matching the received goods with the purchase orders, ensuring accurate accounting and payment processing. ### How are commodity codes used in the context of a GRN? - [ ] To forecast sales trends - [ ] To determine employee bonuses - [x] To classify goods for inventory tracking - [ ] To schedule customer deliveries > **Explanation:** Commodity codes are used to classify goods, simplifying inventory tracking and management within an organization. ### GRN is essential for maintaining accurate records because: - [ ] It sets the sales targets for the next cycle - [ ] It determines the pricing of goods in the market - [ ] It approves expense reports - [x] It confirms that the received goods match the purchase orders > **Explanation:** A GRN is essential because it confirms that the received goods match the purchase orders, maintaining accurate and reliable inventory records.

Thank you for exploring the detailed nuances of Goods Received Note (GRN) and challenging your understanding with our comprehensive quiz questions. Keep growing your expertise in inventory and supply chain management!

Goods Received Note (GRN)