How to Adjust Inventory Value

Hi there, @justonwo.

I'm here to share details on how to modify inventory value in QuickBooks Online.

When the Starting value is incorrect, an item will show zero asset value. Moreover n, a product adjustment was created. With this, I recommend going to the Products and Services page and reviewing the item's configuration. Then, update the details to address the issue.

Here's how:

1. Select Products and Services from the Sales menu on the left panel.
2. Select the item you're working on from the list and click the Edit button in the Action column.
3. Go to the Quantity on hand section and hit the Starting value link to see more information about the product.
4. To confirm the action, select Got it.
5. Check the item details on the Inventory Starting Value # Start page to ensure the data entered is correct.
6. Update the information if it is incorrect.
7. Save and close the window.

If an adjustment has been entered for the goods, double-check the data to ensure it is correct. Follow the steps in this article to verify the information. To view the complete instructions, go to the Edit or delete an inventory quantity adjustment section: Inventory Quantity Adjustment in QuickBooks Online.

Subsequently, you can refer to this article for information on how to check your inventory so that you always have an accurate count: Fix negative inventory issues in QuickBooks Online.

Drop me a line and I'll assist you with more concerns about inventory reports in QuickBooks. I wish you the best of luck!

The starting value is not incorrect. I moved from Quickbooks Desktop earlier this year and was using the average cost basis method.

When I imported my Quickbooks Desktop file to QBO this summer, it converted to FIFO. Looking at the opening quantity and balance, it's correct. Exactly the numbers from Quickbooks Desktop.

You can see all the purchases and sales this year, but when you get to the end, even though all the inventory has been sold, the value with zero quantity on hand is non-zero. I don't understand why. 

I'm loading an example spreadsheet of the part in question. This is the valuation detail report for this year. You can see the first line is the inventory value from Desktop that QBO assigned during migration. I've taken out the names and document numbers for privacy. You can see there are a couple of places where the quantity gets to zero but the value is very much not zero. Makes no sense to me.

Thank you for your prompt response, @justonwo.

I'd like to add more information about how QuickBooks Online tracks inventory. 

Purchasing and selling products after switching from QuickBooks Desktop to QuickBooks Online affects inventory numbers. As a result, it is vital to set up your inventory following the initial conversion.

The items in your inventory will be imported into the Products and Services list. You may notice that your imported items have sub-products called Inventory Asset and COGS. This is due to QuickBooks Online efforts to maintain an accurate accounting of asset value and Cost of Goods Sold.

Furthermore, QuickBooks Online Recalculates the inventory to First In First Out. Please see this page for more details: Move your inventory from QuickBooks Desktop to QuickBooks Online.

I'm also adding this article for your guide on how to set up inventory after converting from QuickBooks Desktop to QuickBooks Online: Set up inventory after conversion. It also includes steps on how to Offset the old inventory asset account. 

Please feel free to leave a reply on this thread if you have any additional questions about inventory adjustments. I'll be happy to help. 

The inventory was all set up properly after the conversion. And yet we still have these valuation issues. 

Hi there, @justonwo. Let me join the thread and share additional insights about your inventory report.

QuickBooks Online (QBO) absorbs data depending on what is recorded or added. With your report, the system just reads the value of your inventory sales and purchases.

 I can see the screenshot you've added and find out that your item's quantity on hand is zero, but not the asset value. I understand the importance of getting the correct inventory quantity and value. For now, I suggest reaching out to our QBO Support. This way, they'll be able to review your inventory entries and configure why this happens.

For more tips while handling your inventory reports in the future, you can open the resources from this link: Create and run inventory reports.

If you have follow-up questions about your inventory value, let me know by adding a comment below. I'll keep an eye to help. Keep safe!

I, too, am noticing that the inventory value of some Products, even though 0 Qty in inventory, has a value.  These products were even 'deleted' made inactive without issue.  The suggestion was made to go to tine Inventory Starting Value > Edit and Save; however, we cannot do this when the inventory starting value was in a previously closed period ... or even in a different year.  Are there any other options to adjusting the value?

I'm also having this issue with my inventory in Quickbooks Online. I suspect that it has to do with the fact that our purchase prices vary quite frequently for the items that we carry in stock depending on the vendor and the manufacturer that we use at the time of purchase. I would very much like to select the item involved and, instead of selecting adjust quantity, select "adjust asset value" so that I can adjust the value of my inventory accordingly. I would want the adjustment to look something like "Dr/Cr Inventory offset by Dr/Cr Inventory Shrink" depending on which way I'm seeing the variance.

Hello there, Michelle.

I'm here to ensure the records of your inventory items are correct, specifically the asset value. We can create a journal to fix this. It will then adjust the item on General Ledger.

But before doing so, I'd recommend consulting with your accountant first to get guidance on how to properly handle this in your account depending on the type of business you're running, and for your books not to mess up. Your accountant can give you more expert ways on what accounts to use. If you don't have an accountant, you can find one here: Find an accountant.

To adjust the asset value, please follow these steps:

1. Click on the +New icon.
2. Select Journal Entry under Others.
3. Fill in the Journal date and the Journal no. in their appropriate fields.
4. In the first line, choose the specific account to use.
5. Go to the next line and choose the account you’re moving money to or from.
6. In the Debits and Credits column, make sure the amounts are the same to balance the accounts.
7. Tap the Save and close button.

Also, feel free to visit this article to help you how to resolve other inventory issues.

Additionally, you can utilize this article as your reference in case you want to keep track of your inventory items such as your best sellers, what's on hand, and the cost of goods: Use reports to see your sales and inventory status.

Please don't hesitate to reply on this thread if you've got more queries about handling your inventory items in QuickBooks Online. It'll be my pleasure to assist you further. Have a wonderful day.

I'm afraid creating a JE against an account where the basis of its value is the "product ID" ... where in a JE, we cannot adjust by "product ID" renders any audit of this account with the basis of "product ID" as no longer and option.  That does not address the base issue of not being able to adjust the cost.

I agree with Degemme's response below that I do not want to create a journal entry to correct this imbalance without having it attached to the specific product in the inventory management system. After sitting on hold with the Quickbooks customer support team for approximately 2 hours, I have learned why the Quickbooks Online version does not allow this type of adjustment.

Since Quickbooks Online uses the first in/ first out (FIFO) method of calculating inventory value (as opposed to the average cost method) it does not allow users to adjust inventory value for a specific product by direct adjustment. It only allows users to adjust product quantity (unless you want to adjust said product's starting value, which most of the users on this post, understandably, did not want to do).

After spending some time reviewing some of the products of concern for our company, I realized that most of the asset value errors I was seeing in our inventory valuation summary report were caused by doing inventory quantity adjustments out of order. For example, completing a count for a particular product or item and then making an adjustment that I thought was correct before then selling more product than Quickbooks now thinks I have on hand (say, because said item had been taken off the shelf and was being used by our repair team and therefore not visible before the count had taken place but was still actually in our possession). Most of these issues were reflecting inventory count & adjust timing errors. So... what to do now?

What I ended up doing was going back through each item that I had this error with and using the "run report" option under the "action" choices. Then, once I had identified the specific point in time where the items valuation had gotten off (which, for our company, was typically related to a bad quantity adjustment journal entry) and then opening that journal entry and either deleting it or adjusting the quantity correctly.

My only continuing hesitation with this method of correction is that it causes me to go back in time in my books to periods that are, essentially, closed. I guess that's why it's important to include an inventory asset review at the end of every month and I'll have to be more attentive to this issue in the future.