QuickBooks POS Inventory Adjustment Account
Inventory, like payroll, is consistently one of the most problematic areas for clients. A rigid set of procedures, with everyone inputting data consistently and in a timely manner is crucial. This often opens an opportunity for training.
The fundamentals should be reviewed initially. First, evaluate whether the Inventory items in QuickBooks® are set up properly. Clients often set up items as type – inventory, when they would be better served using the non-inventory item type. The non-inventory type does not keep a perpetual count or an average cost.
Second, evaluate whether the total inventory value on the inventory valuation summary report agrees to the inventory amount reported on the Balance Sheet. Disagreement in these two numbers can be caused by several factors. A Client Data Review (CDR) tool can assist with this problem.
Third, review the Inventory Valuation Summary for negative quantities and inaccurate average costs.
Common Error: Incorrect and/or inconsistent inventory procedures
Symptoms
- Inventory Valuation Summary report shows negative quantities
- Inventory Valuation Summary does not agree to General Ledger
- Average cost appears incorrect
- Asset value does not agree with the General Ledger
CDR Tool – Compare Balance Sheet and Inventory Valuation
The only method available in QuickBooks for inventory valuation is average costing. An Inventory Valuation Summary Report summarizes the quantity, average cost and extended value of each of the inventory quantities and provides a total inventory valuation. The total asset value on this report should match with the Balance Sheet value for Inventory; just ensure these two reports were created with the same time/date settings if other users are entering data in QuickBooks at the same time.
