Tag Archives: QuickBooks inventory

QuickBooks | Stock Adjustment

Software: Intuit QuickBooks accounting software

After completing your physical stock count, you are required to do a stock adjustment in QuickBooks to match the stock on hand in QuickBooks with the physical stock count. From the Vendors menu, go to the Inventory Activities and follow by the Adjust Quantity/Value on Hand to start your stock adjustment.

Intuit QuickBooks has an option that allowing you to adjust only the quantity, the total value or both the quantity and total value. From the Adjustment Type drop down list, select an adjustment type for your stock adjustment transaction.

Enter the Adjustment Date and select your Adjustment Account (either Expense type or Cost of Goods Sold type of account will be used, check with your accountant for the type of account use for your business).

Next, click the “Find & Select Items” button to select your item to be adjusted. Then, enter the new quantity (and value if required) as according to your physical stock take. Lastly, click the “Save & Close” button when you have completed the adjustment.

Stock Adjustment

The double entry for the adjustment will be debit/credit the Stock Adjustment expense account and credit/debit the Stock Assets account (Inventory Assets).

Understanding QuickBooks Inventory (Stock) Module

To use QuickBooks inventory module, first, you need to turn on the inventory module. To turn on the inventory module, you go to Edit menu, select Preferences. From the Preferences Window, click on the Item and Inventory icon on the left side of the Window to get into the Item & Inventory preferences. Next, go to Company Preferences tab; check the check box for Inventory and Purchase Orders are Active field. Click the ‘OK’ button to save your setting.

When you add an inventory item into your item list, there are three accounts you need to associate this item with, they are COGS account (Cost of Goods Sold), Income account and Asset account (Inventory).

When you purchase an inventory item from your supplier, example: ten units of Item 123 at $100.00 each, the double entry for this item will be:

    Debit: Asset account (Balance Sheet account) at $1,000.00

    Credit: Accounts Payable (Balance Sheet account) at $1,000.00

At this stage, the transaction is only between Balance Sheet accounts (Inventory Asset account and Accounts Payable account). Therefore, you will not able to see this transaction as a ‘Purchase’ (Cost of Goods Sold account) in the Profit and Loss report.

When will it affecting the Cost of Goods Sold account?

When creating an invoice for the Item 123 (example: you sell five units at $150.00 each), the double entry for this invoice will be:

    Debit: Accounts Receivable (Balance Sheet account): $750.00

    Credit: Sales account (Profit and Loss account): $750.00

    Debit: Cost of Goods Sold account (Profit and Loss account): $500.00

    Credit: Inventory Asset account (Balance Sheet account): $500.00

Join my QuickBooks training class to have a better understanding of using QuickBooks inventory module.