I've started at a company where prior inventory items were setup with COGS going to Inventory instead of COGS. This goes back years. I am hesitant to just change the account at this time given the history of the problem. I thought of creating all new accounts and making old accounts inactive except they have inventory on hand. What would be the best way to update this account so that items are correct moving forward? It looks like in the past their accountant made a journal entry to correct financial statements.
Journal entries should be the exception when using QB, they often do not work as you think they should, and when you use inventory type items they never work for inventory. It is much better to use the forms on the home page the way QB is designed to be used. Journal entries also bypass accrual/cash reporting, and will not show on many reports.
Inventory and assembly items have three accounts expense = COGS income = your sales income account asset = inventory asset
make a back up change the accounts on one, one inventory item, QB should ask if you want historical transactions changed too, say no.
if that works make a back up
change all inventory items, you can use add/edit multiple, customize to show the accounts, change the top one and then right click and select copy down now check your past financials to insure that the add/edit did not change historical reports, if it did (I have not used it for this in a long time so I am not sure) but if it did, restore from back up, and change accounts one item at a time
run a balance sheet, double click on the inventory asset account, set the date range to ALL, customize and set the group by field to item detail, refresh the report. At the bottom of the report usually is a section titled No Item, every transaction in that section has to be examined, figure out what needs to be one the correct way, delete the transaction, enter it correctly. then rinse and repeat make back ups repeatedly so that if you mess something up, all is not lost