Question

Inventory Accounting in QuickBooks Simple Start

Forum|Forum|5 years ago
August 13, 2021
3 replies
54 views

I’m using Quick Books Simple Start, which does not have an inventory tracking feature, for my jewelry-making business. I created an Inventory Asset account within my Chart of Accounts, and manually assigned the purchase of all materials used to create the jewelry to that account when I created the expenses for those purchases. How can I manually reduce the Inventory amount to reflect the cost of materials used as jewelry pieces are sold? I tried to do a Journal Entry from Inventory to Cost of Goods Sold, but the Inventory line item is not an option that can be selected in the Journal Entry form.

QuickBooks Online

M

Maybelle_S

QuickBooks Team

Thanks for posting on the Community page, @tsloan.

To manually track the value of your inventory assets in QuickBooks Online (QBO). You can create an account to track your inventory value. Here's how:

1. Go to the Gear icon, then Chart of accounts.

2. Click the New button at the top right corner.

3. Select Other Current Assets from the Account Type drop-down.

4. Choose Other current Assets from the Detail Type drop-down.

5. Hit Save and Close.

Once done, create an account to track your cost of goods sold. I'll guide you how:

1. Go to the Gear icon at the top, then Chart of Accounts.

2. Click New.

3. Select Cost of Goods Sold from the Account Type drop-down.

4. Choose the closest type of Cost of Goods Sold that matches your situation from the Detail Type drop-down.

5. Hit Save and Close.

When you purchase inventory using Checks, Expenses, or Bills, use the asset account you created to track its value in the Account field. This "transfers" the money into the asset account, increasing the value of your inventory.

You can refer to this link for further details: Manually track inventory.

To learn more and understand the workflow of the Chart of Accounts in QuickBooks, you can refer to this article: Understand the chart of accounts in QuickBooks.

As always, feel free to let me know if you have other questions about QuickBooks Online. I'd be happy to help. Have a great day, and be safe always.

T

tsloanAuthor

This doesn’t seem to be working. I created the current asset account, the amount that I’ve spent on inventory shows up in that current asset account when I view my Chart of Accounts, but that current asset account is not an option that I can select within the Journal Entry form, so I can’t credit that account to decrease the value of inventory.

K

Klent

Level 8

Hi there, tsloan.

Let me share additional information about how inventory works.

When manually tracking inventory in QuickBooks Online Simple Start, you'll have to use the Inventory Asset account. This way, you'll be able to properly decrease the value of your inventory by creating a journal entry. Here's how to set it up:

Click the Gear icon at the top.
Choose Chart of Accounts.
Select New, then enter the category name.
Click the Select category link, then go to the Other accounts section.
Hit Next, then choose Inventory Asset.
Click the Select button, then enter the description.
When you're done, hit Save.

You may refer to my screenshot below:

Additionally, I've included an article that will help you record the inventory items that you're donating or giving away: Track donated inventory.

If I can be of any additional help, please don't hesitate to tag me in the comment section. Have a great rest of the day.

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