Where is Cost Derived When Doing a Goods Receipt

Let’s Get to the Point:

When you post a Goods Receipt (GR) for a Purchase Order (PO) in SAP, the cost comes from the PO price — which was initially determined by the conditions in the purchasing process (like contracts, info records, manual entry, etc.). But how it hits your financial books? That's where things get interesting — and a little nerdy in the best way.

Goods Receipt Accounting Entries: What’s Actually Happening?

Let’s say you're receiving materials into stock. Here’s how SAP posts the accounting document: 
Dr Inventory (Stock)
Cr GR/IR Clearing Account
Let’s decode that:

Dr Inventory: Is This Cost of Sales?

Nope. It's not the cost of sales — yet. At GR, you're increasing your inventory (an asset), not expensing it. The value posted to stock is based on:
  • The PO price (for Standard Price “S” materials)
  • The latest moving average price (for Moving Average “V” materials)
This is where Transaction OMW1 plays a role: it defines whether materials follow price control “S” or “V.”

Cr GR/IR: What Exactly Is This?

GR/IR stands for Goods Receipt / Invoice Receipt. Think of it like SAP’s internal IOU or "clearing" account. Here’s the idea:
  • You've received goods (GR), but haven’t received the invoice yet.
  • So, SAP temporarily “parks” the value in this clearing account until the invoice arrives.
  • It’s not a final liability yet — more like a placeholder.

Invoice Receipt (IR): Now Let’s Pay the Bill

When the vendor invoice arrives and you post it via MR01 or MIRO, here’s what happens: 
Dr GR/IR
Cr Vendor (Accounts Payable)
[Optional] Dr/Credit Inventory or Price Variance
This closes the loop. SAP now matches what you received (GR) against what you’re billed (IR). If there’s a difference in value between GR and IR, SAP uses additional postings to balance things out, depending on the price control:

Price Control "V" – Moving Average Price (MAP)

Scenario: PO Price is 12, but Material Master MAP is 10

GR Posting:

Dr Inventory     12  
Cr GR/IR         12  
Your stock value goes up by 12, and SAP recalculates a new MAP.

IR Posting:

Dr GR/IR         12  
Dr Inventory      3 ← (Adjustment to MAP)  
Cr Vendor        15  

Why the Extra 3 to Inventory?

Because you paid 15, but only recorded 12 at GR. So SAP updates the inventory with the difference (15-12 = 3) to keep your average cost accurate.

New MAP Formula:

New MAP = (GR Value + Existing Stock Value) / (GR Quantity + Existing Quantity)

Price Control "S" – Standard Price

Scenario: PO Price is 12, but Material Master Standard Price is 10

GR Posting:

Dr Inventory         10  
Dr Price Variance     2 ← (Difference from PO)  
Cr GR/IR             12  
SAP books the inventory at standard price, and logs the difference as a price variance.

IR Posting:

Dr GR/IR             12  
Dr Price Variance     3 ← (IR was 15, GR was 12)  
Cr Vendor            15  
No change to inventory value — the price variance accounts absorb the difference between actual and standard cost.

Summary of Key Accounts Used

Transaction Account Nature Purpose
GR Inventory Asset Adds value to your stock
GR GR/IR Clearing Liability Temporary placeholder until invoice is received
IR Vendor (AP) Liability Final liability to vendor
IR GR/IR Clearing Liability Clears the earlier placeholder
IR (MAP) Inventory Asset Adjusts stock value for invoice price difference
IR (Standard) Price Variance Expense Captures differences when invoice ≠ GR based on standard cost method

Final Thoughts

This whole GR/IR and Price Control mechanism in SAP is super elegant once you get used to it. It's built to ensure that your inventory is always accurately valued, and your books stay clean and audit-ready — even when real-world pricing fluctuates like crazy. If you’ve ever reconciled vendor invoices that don’t match POs, you’ll appreciate just how helpful these SAP postings really are.

Related:

Get help for your SAP MM problems
SAP MM Forums - Do you have a SAP MM Question?

SAP Material Management Books
SAP MM Books - Certification, Interview Questions and Configuration

SAP Materials Management Tips
SAP MM Configuration Tips and Materials Management Discussion Forum

Best regards,
SAP Basis, ABAP Programming and Other IMG Stuff
http://www.erpgreat.com

All the site contents are Copyright © www.erpgreat.com and the content authors. All rights reserved.
All product names are trademarks of their respective companies.  The site www.erpgreat.com is in no way affiliated with SAP AG. 
Every effort is made to ensure the content integrity.  Information used on this site is at your own risk. 
 The content on this site may not be reproduced or redistributed without the express written permission of 
www.erpgreat.com or the content authors.