I'm here to share with you some information about inventory so you'll be guided on what you're supposed to do, hongkonghelmut.
QuickBooks Desktop calculates inventory values based on the assumption that the first inventory items received are the first sold. This is the usual concept used by businesses to track inventory. For Advanced Inventory, you'll have the option to switch from Average Cost to FIFO so you can calculate the value of inventory sold and on-hand. To do this, you can follow the steps below:
- Open Advanced Inventory Settings for FIFO:
- Select Edit then Preferences.
- From the left menu, select Items & Inventory, then choose the Company Preferences tab.
- Select Advanced Inventory Settings, then choose the FIFO tab.
- Select Use FIFO starting on and choose a date.
QuickBooks recalculates all inventory-related transactions starting on the date you enter. You can start tracking FIFO on any date. If you decide to turn off FIFO later, uncheck Use FIFO starting on, and QuickBooks will once again calculate inventory value using the average cost method.
- Select OK then OK again to close the Preferences window.
Please know that when you switch from average costing to FIFO, QuickBooks changes the following reports:
- Inventory Valuation reports
- Balance Sheet reports
- Profit and Loss reports (cost of goods sold)
In order to give you a clearer picture of average cost and FIFO, you can check out this Firm of the Future blog. This provides samples and illustrations of how purchases relate to the cost of sales: Average Cost vs. FIFO Inventory Valuation In QuickBooks.
In addition, QuickBooks provides different reports that cater to your business needs. You'll want to customize some of your information, add or delete columns, add or remove information or even personalize the style of the report, go through this article for your guide: Customize Reports In QuickBooks Desktop.
Fill me in if you have any other concerns about inventory. I'll always be right here to help you anytime.
