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Level 1

Inventory Adjustment

Hello Everyone,

 

We are currently in the process of switching from a different accounting software to QuickBooks. And I just want to preface this by saying I'm not an accountant, if that isn't obvious by what follows. 

 

The issue that I'm having is that some of the inventory parts were entered with a 0 balance, when in actuality we had some on hand, and now I'm looking to correct that mistake. As far as I know you can change inventory in 3 different ways: you can receive the inventory with or without a bill, or you can make an inventory adjustment. I'm almost positive that I don't want to receive the inventory, so it looks like I'm looking at inventory adjustment.

 

My problem is then that I'm not sure exactly what my adjustment account should be. I'm pretty sure that I don't want it to be an income or expense as I don't think I'd want it to show up on the Profit and Loss report, but QuickBooks warns me about this when I choose Inventory Asset. Do I not actually want to adjust it using this account? What would be a better account if I don't want to use that one?

3 Comments
QuickBooks Team

Re: Inventory Adjustment

Welcome to the Intuit Community, jh2399.

 

Let’s adjust the quantity on hand for your inventory by using the Opening Balance Equity as the posting account. This way, it will not show on the Profit and Loss Report.


To begin, create the account so you can use it when adjusting the inventory parts. Here’s how:

 

  1. Navigate to the List menu to open the Chart of Accounts.
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  2. When the page opens, right-click your mouse anywhere and choose New.
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  3. In the Account window, mark the radio-button for Equity and then hit the Continue button to proceed.
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  4. Enter a name in the Account Name field and click Save & Close.
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Now, adjust the quantity by going to the Adjust Quantity/Value on Hand window. I can help show the steps.

 

  1. At the top bar, go to the Inventory menu to select the Adjust Quantity/Value on Hand.
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  2. Another window will open, type in the Adjustment Date and enter Opening Balance Equity as the Adjustment Account.
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  3. You can also type in additional details such as reference number, Customer/Job, or Class.

Then, select the product you’re adjusting to and add it in QuickBooks. For the step by step procedure, click here and proceed directly to Step 2 until Step 3.

 

Every business is distinct, and it goes the same way with posting transactions. Modifying the quantity on hand for the item involves a specific account.

 

I recommend consulting your accountant to keep your records in tiptop shape.

 

I’m also adding articles with links to help get started with QuickBooks Desktop.

 


Let me know if you have further questions or any other concerns. I’m always ready to help. Have a good one.

 

Level 1

Re: Inventory Adjustment

I'm a little confused, what's the purpose of the first half of that (1-4)?

 

Did you mean to use that newly created account instead of where you put "Opening Balance Equity"?

QuickBooks Team

Re: Inventory Adjustment

Hello there, jh2399.

 

Let me bring clarifications to your follow-up question on which account should be used when creating inventory adjustment in QuickBooks Desktop.

 

If there's no Opening Balance Equity created or if you wish to have a separate one, you can create an account and use it as your inventory adjustment account. You can follow the steps provided by my colleague.

 

I'd appreciate if you let me know how it goes. I'm still here whenever you need help with inventory adjustment. 

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