diff --git a/erpnext/stock/doctype/purchase_receipt/test_purchase_receipt.py b/erpnext/stock/doctype/purchase_receipt/test_purchase_receipt.py
index 6f61a3c3e4d..adb16ff0e7c 100644
--- a/erpnext/stock/doctype/purchase_receipt/test_purchase_receipt.py
+++ b/erpnext/stock/doctype/purchase_receipt/test_purchase_receipt.py
@@ -5419,6 +5419,33 @@ class TestPurchaseReceipt(ERPNextTestSuite):
 			self.assertEqual(row.warehouse, "_Test Warehouse 1 - _TC")
 			self.assertEqual(row.incoming_rate, 100)
 
+	def test_bill_for_rejected_quantity_in_purchase_invoice(self):
+		item_code = make_item("Test Rejected Qty", {"is_stock_item": 1}).name
+
+		with self.change_settings("Buying Settings", {"bill_for_rejected_quantity_in_purchase_invoice": 0}):
+			pr = make_purchase_receipt(
+				item_code=item_code,
+				qty=10,
+				rejected_qty=2,
+				rate=10,
+				warehouse="_Test Warehouse - _TC",
+			)
+
+			self.assertEqual(pr.total_qty, 10)
+			self.assertEqual(pr.total, 100)
+
+		with self.change_settings("Buying Settings", {"bill_for_rejected_quantity_in_purchase_invoice": 1}):
+			pr = make_purchase_receipt(
+				item_code=item_code,
+				qty=10,
+				rejected_qty=2,
+				rate=10,
+				warehouse="_Test Warehouse - _TC",
+			)
+
+			self.assertEqual(pr.total_qty, 12)
+			self.assertEqual(pr.total, 120)
+
 
 def prepare_data_for_internal_transfer():
 	from erpnext.accounts.doctype.sales_invoice.test_sales_invoice import create_internal_supplier