Re: QuickBooks online Inventory

QuickBooks Help QuestionsRe: QuickBooks online Inventory
Carolyn asked 5 years ago

When inputting a bill to pay and a new Inventory Item is entered on the fly, should I go back to zero-out the entry credited in the Open Balance Equity account; because the new item is just being purchased and not something we had on hand before this time?  If so, what is the off setting account (to Open Balance Equity)?

Hi Carolyn,

Thank you for asking such a great question.

When you create a new product item during inventory setup it will ask for initial quantity on hand. I understand this field is kind of confusing to many users because they made this required rather than the optional field. Let me explain it to you the very simple way if possible.

Normally, you will enter its quantity zero here for a new product item. You will enter the initial quantity on hand one-time, only if you are converting or transferring those items and they have already been accounted for in the prior company books. That’s why behind the scene, QuickBooks will show as Inventory Asset (as debit) and Open Balance Equity (default type as credit) on the Balance Sheet.

For recording on-going new items purchases, you will enter quantity from the item details section of the vendor form (expense, check, bill). This will automatically add quantity and dollar value of inventory asset.

There should be no need for making further manual inventory adjustments (from Products/Services List) unless it’s for occasional physical inventory count adjustment.

When you create sales forms (invoice or sales receipt), it will automatically reduce quantity and dollar value from the inventory asset account and post it to COGS (expense) account.

Hope this helps!


 

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1 Answers
admin Staff answered 5 years ago

Hi Carolyn, Thank you for asking such a great question. When you create a new product item during inventory setup it will ask for initial quantity on hand. I understand this field is kind of confusing to many users because they made this required rather than the optional field. Let me explain it to you the very simple way if possible. Normally, you will enter its quantity zero here for a new product item. You will enter the initial quantity on hand one-time, only if you are converting or transferring those items and they have already been accounted for in the prior company books. That’s why behind the scene, QuickBooks will show as Inventory Asset (as debit) and Open Balance Equity (default type as credit) on the Balance Sheet. For recording on-going new items purchases, you will enter quantity from the item details section of the vendor form (expense, check, bill). This will add to quantity and dollar value of inventory asset. When you create sales forms (invoice or sales receipt), it will reduce quantity and dollar value from the inventory asset account and post it to COGS (expense) account. Hope this helps!

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