All 21 Purchase Orders & 3-Way Matching questions
More in Purchase Orders & 3-Way Matching
What is matching tolerance and why is it used? What are common causes of a three-way match failure? How are partial deliveries and partial invoices matched against a PO? What is a blanket (standing) purchase order? What does it mean to 'short pay' or 'block' an invoice, and when is each used? What is a PO commitment and how does it aid budgeting? How are freight, duty, and miscellaneous charges handled in matching? What is evaluated receipt settlement (ERS) / pay-on-receipt? How does PO matching support period-end accruals? How do you reconcile and clear an aged GR/IR account?
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Accounts Payable & Receivable › Purchase Orders & 3-Way Matching

What is the accounting flow across PO, goods receipt, and invoice?

Intermediate

Answer

Raising a PO is a commitment only—no financial posting. On goods receipt, you debit inventory/expense and credit GR/IR. On invoice receipt, you debit GR/IR and credit accounts payable. On payment, you debit AP and credit bank. GR/IR nets to zero once receipt and invoice match, isolating timing differences.
PO: (no journal, commitment only)
GRN: Dr Inventory 2,500  Cr GR/IR 2,500
Invoice: Dr GR/IR 2,500  Cr AP 2,500
Payment: Dr AP 2,500  Cr Bank 2,500
Real-world example Finance can see received-not-invoiced liabilities in the GR/IR balance even before invoices arrive.

Common follow-ups: Why does the PO itself post nothing? | What does an open GR/IR balance represent?

Invoice Processing Reconciliations Purchase Orders & 3-Way Matching
All 21 Purchase Orders & 3-Way Matching questions