Purpose of Stock Received but not Billed

When purchased items are received, an accounts posting is done based on the value of the purchased items in the Stock-in-hand / fixed-assets account. When you sell and deliver those items, an expense (cost-of-goods-sold) is booked, equal to the buying cost of the items.

As stock balance increases through Purchase Receipt, Warehouse account is debited and an adjustment account called Stock Received But Not Billed account is credited. At the same time, the negative expense is booked in account Expense included in Valuation for the amount added for valuation purpose, to avoid double expense booking.

On receiving Bill from the supplier, you will make Purchase Invoice against a Purchase Receipt. Here Stock Received But Not Billed account is debited, hence nullifies the balance in the Stock Received but not Billed Account.

The balance in the Stock Received but not Billed account indicates the value of items for which Purchase Receipt has been made, but billing is pending.