Before the end of the year, we do a complete inventory count and make a single inventory adjustment to bring things into line. I made an inventory adjustment which contained 34 lines (items). When I run a report of the Shrinkage account, it shows this adjustment to have 37 lines of which the first has blank entries under Amount and Balance. Thus I have 36 lines of Shrinkage items and of course a significantly higher figure for the total.
I have tried exporting the report into Excel and comparing it to the spreadsheet I used to arrive at the adjustments. That spreadsheet was created from a Physical Inventory Worksheet exported from QB and there have been no changes in items or their costs. Despite this, I can't make a comparison because the Amount figures on the Shrinkage report don't match those on the Adjustment.
Any ideas how QB has created the discrepancy in particular the different number of lines on Shrinkage? And of course how do I correct whatever error is causing this?
I'll share some information about Adjust inventory quantity on hand in QuickBooks Online.
The value of the inventory in QuickBooks Online follows a FIFO process. There will be a possibility that one inventory item will show up twice or more in the report once the purchase value has a different amount. For example, one apple is 300, and when you next purchase this item the value changed to 250. This will show up twice if it is affected by the shrinkage. That's the reason it shows this adjustment to have 37 lines.
To see additional information about inventory quantity in QuickBooks Online and to view sample scenarios to help you understand the concept of FIFO in QuickBooks Online, you can refer to the articles below.
Thanks ChristieAnn. That makes sense. I'd forgotten about FIFO.
I have painstakingly compared each line in the adjustment to find out which ones match the shrinkage report. Thus I can now check which items changed value during the FIFO period which should explain the extra lines.
However the cost prices have never gone down so even with FIFO the total amount of the adjustment should not be equal to or less than the valuation of the adjustment in excel using the current cost figures in QB, The only explanation I can come up with for the shrinkage being greater is that the items which have negative shrinkage have increased in price and that this is more than any negative effect of the positive shrinkage. It's unlikely but with your reply I may be able to examine it forensically.