## Receipt and Inspection of Materials
When materials arrive against a Purchase Order, the receiving / store department takes charge and inspects them.
The flow:
1. Purchase execution — PO issued, any advance paid.
2. Delivery — materials arrive with invoice and supporting documents.
3. Receiving department takes charge and begins inspection.
4. Inspection — materials checked for conformity with the PO in quality and quantity.
5. If materials are OK → a Goods Received Note (GRN) is issued and materials are added to inventory.
6. If materials are defective / incorrect → they are returned to the vendor with a Material Returned Note (MRN).
### Goods Received Note (GRN)
- Prepared only when materials are received in good condition and match the purchase order.
- Prepared by the Receiving Department.
- Also called Receiving Report, Material Inward Note, or GRN.
- Prepared in four copies (quadruplicate), distributed to:
1. Purchase Department
2. Store / Indenting Department
3. Receiving Department
4. Accounting Department
- Acts as the official record of accepted goods for inventory and accounts.
### Material Returned Note (MRN)
Sometimes materials must be returned to the supplier after being received in the factory.
- If the materials were never recorded in the receiving report or store ledger → no accounting adjustment is needed.
- If the materials have already been recorded → a Material Returned Note (Material Outward Return Note) must be prepared so their value is excluded from the Stores / Material Account.
- Purpose: documented proof of return, keeping inventory and accounting records accurate.