Managing Inventory with Quickbooks

Managing Inventory with Quickbooks

Every business, large or small, has inventory that requires tracking. Can Quickbooks do that? It certainly can. However, stick to the guidelines! Sure, managing inventory can be tedious and boring. You may be tempted to get “creative” or take a short-cut. If you are using Quickbooks to manage inventory, here are a few things you should NEVER do.
1. Don’t Inactivate Items Before Zero: If you are planning to discontinue a product that you sell, don’t “inactivate” it. Rather, perform Adjust Quantity/Value on Hand adjustments. Zero out the quantities. All items on hand have a value cost even if you no longer offer them for sale. By inactivating them, that value will be eliminated from Inventory Valuation Summary yet will still be applied as part of Inventory Asset and affect your Balance Sheet. Before inactivating any item, always zero out the quantities.
2. No Splitting Items: Some items may be used in multiple locations. Companies with two separate warehouses may have a single item used in both places. You may be tempted to use Advanced Inventory to give a split designation to the shared item. The problem starts with Item Receipt. You can’t split a receipt. Either one warehouse receives the item that is paid in full or the other warehouse receives it. The only way a split item works is if the item is then transferred back and forth between the two different warehouses through a receipt process in Quickbooks. This results in an inventory adjustment nightmare.
3. Avoid Posting Purchase To Inventory Asset: When an item is received, it is the Items tab that should be selected, not the Expenses tab. The Items tab allows the items received to be listed. If Expenses is selected, the transaction then posts directly to the Inventory Asset on the Balance Sheet. The Balance Sheet will increase but the Inventory Valuation Summary Report will not reflect the inventory detail of items that were received.
For answers to all your questions about Quickbooks, please contact the accounting professionals at F & F Business Services.

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