Converting Inv Items from desktop to Online

JZ17 · ‎February 17, 2026

Thanks in advance for help. Upgraded from desktop to online and so far, the live expert help has not worked out.

We have Inventory Items in Quickbooks for each product we sell

Each Item has an income account for sales, a cogs account, and an inventory Balance sheet account. If I sell one unit, It will charge the revenue to the PL Income and remove the AVERAGE Bottle cost from COGS. It will also remove the appropriate Cost form the Balance sheet account of Inventory Finished Goods

Our inventory sub components are simple - 2 parts for each, raw material and packaging

Here's what I do:

Enter bill Raw material on Balance sheet

At time of PO to Packager, I enter another bill to WIP (Work inProcess) Balance sheet

When we get the yield, I do two things:

#1 I move the Raw Material and WIP dollars to the Finished Goods section of the Balance sheet, dollar for dollar entry no effect on total, just reclassify.

#2 I update the appropriate SKU with the total yield in units.

So now INV finished goods is higher by the total $ amount of the individual components.

Lastly, let's say there are 100 units in Inv before the addition at a total cost of $900. Each time we sell from these the COGS is increased and INV Finished goods is reduced $9 per bottle.

Now let's say the new batch adds 100 more units for a total added inv cost of $1000. Any sales receipt or invoice that is generated after that will add $9.50 to Cogs per bottle and reduce INV finished goods the same.

The issue is that upon setting up these items up in online they are not hitting the COGS account or the balance sheet upon creating sales receipts or invoices. I am also unclear hoe to import the existing cost of inv and how to make sure it calculates average cost after future inv updates.

Hoping someone can help us!

KayePe · ‎February 17, 2026

Hello there, @JZ17. Migrating from QuickBooks Desktop (QBDT) to QuickBooks Online (QBO) can seem overwhelming with all the changes, particularly with inventory. I’m here to help you understand and get everything on track.

The inventory items you entered in QBO that are set to a Cost of Goods Sold (COGS) account will be recorded differently in the Profit and Loss report depending on your accounting method. If you use Accrual basis accounting, you can see the sales receipts and invoice transactions affecting the COGS account. If you use Cash basis accounting, COGS will only reflect expense transactions. Note that the COGS is classified as an expense account and will not appear on the Balance Sheet report. This report is specifically designed to show assets, liabilities, and equity accounts.

When you move from QBDT to QBO, the system uses the inventory details you set up in QBDT, including item names, costs, and the related transactions. Since these transactions are transferred along with the inventory data, they become the basis for the existing inventory costs in QBO. If there are changes to the costs, QBO will automatically recalculate the inventory values. To ensure the average cost is properly calculated after future inventory updates, you can run an Inventory Valuation Summary report. Here's how:

Go to the Reports menu.
Search for Inventory Valuation Summary.
Adjust the date range if needed. Review the report, focusing on the Calc. Average column for average cost details.

Let us know if you have additional concerns. We're here to guide.

JZ17 · ‎February 18, 2026

Thank you for the reply

Some additional detail and follow up questions:

We had to back out the migration as it failed on several levels. We have decided to build the new company from the beginning using some of the same methods.

First, yes I understand that COGS is PL only as it is an expense. However, with the new items that I have set up Sales receipts or Invoices for the newly set up item are not reflecting in COGS, only the Income part. Apparently there is something wrong with the setup. The goal is to Start with an existing inventory 1/1/26.

For ease of use lets say 100 units at $1 each. My expectation would be that upon entering an invoice or sales receipt for 1 item, COGS would increase by $1, and Inventory Finished Goods (Balance Sheet) would be reduced by $1. Neither of these are happening, can you explain the proper process of setting up the item?

Also, how de we update the item sku in the future based on the purchase of the two types of subcomponents of the inventory item? I will hold other questions for now.

Thanks!

ClaireSamanthaS · ‎February 18, 2026

We appreciate you reaching back, JZ17. The reason your Cost of Goods Sold (COGS) and Inventory levels aren't moving is due to the Item Type or the account mapping during setup. I'll provide the steps below.

To get everything set up just right, we'll need to make some edits to the item. Here's how to do it:

Go to Products & Services and edit the item.
Make sure that the Type is set to Inventory, not Service or Non-inventory.
Check the Initial quantity on hand is 100 units, and the as-of date is 1/1/26.
Ensure the Initial cost is set to $1 per unit.
Verify that the proper account mapping is set to set the inventory value under the correct Inventory Asset Account.
Confirm the Expense Account (COGS) is mapped correctly.
Once done, click Save and close.

Once updated, this should now reflect the appropriate mapping of the expense account in the COGS.

For updating SKUs after subcomponent purchases, you'll need to manually adjust the SKU for finished products to reflect changes or variations. It’s always a good idea to consult your accountant for guidance on recording these updates.

Additionally, since you're starting from scratch, selecting the correct inventory valuation method is crucial. Since you mentioned average costing, be sure to select this in the Accounts and Settings section. For detailed steps, this article can help: Inventory valuation methods for cost accounting.

Please note that QuickBooks Online doesn't support converting from single-entry management. If you need this advanced method, we recommend exploring third-party applications to meet your business needs.

If you have any further questions or require additional assistance, please add a comment below. We are here to help.

JZ17 · ‎February 18, 2026

thanks for the further reply. I have confirmed that I have set up in accordance with what you wrote. After 7 hours on a call with support, it seems there is a problem with our account and it has been escalated for further research.

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