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Track inventory manually in QuickBooks Online

SOLVEDby QuickBooks268Updated 1 month ago

Track the value of your inventory assets manually in QuickBooks Online Essentials and Simple Start.

Create an account to track your inventory value

  1. Select Settings ⚙ then Chart of accounts (Take me there).
  2. Select New.
  3. From the Account Type dropdown, select Current assets.
  4. From the Detail Type dropdown, select Other current assets.
  5. (Optional) Enter a unique Name (system default will be Other current assets), Description, Default Tax Code, and Balance for the account.
  6. Select Save and Close.
  7. (Optional) Create an account for each type of inventory. For example, if you sell used cars and motorcycles, you'd create an account for cars and another for motorcycles.

Create an account to track your cost of goods sold

  1. Select Settings ⚙ then Chart of accounts (Take me there).
  2. Select New.
  3. From the Account Type dropdown, select Cost of Goods Sold.
  4. From the Detail Type dropdown, select the closest type of Cost of Goods Sold that matches your situation. If you're not sure, use Other Costs of Service - COS.
  5. (Optional) Enter a unique Name, Description, and Default Tax Code for the Cost of Goods Sold item.
  6. Select Save and Close.

When you purchase inventory (using Checks, Expenses or Bills)

Use the asset account you created to track its value in the Account field. This "transfers" the money into the asset account, increasing the value of your inventory.

When you sell inventory

  1. Select + New.
  2. Select Journal entry.
  3. On one line, enter a Debit to your cost of goods sold account for the original cost of the product you sold. Do not use the sales price.
  4. On the next line, enter a Credit for the inventory asset account for the original cost of the product you sold.
  5. Select Save.

This Journal Entry decreases the value of your inventory (indicating you have less) and increases your Cost of sales.

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