Inventory Acct differs greatly than Balance Sheet, why?

<update: right after I hit Post, a thought hit me and I tried this below which sheds some light on it now......so, when I run the Balance Sheet as accrual, it basically matches the Acct Balance. We are cash accounting so now I'm trying to wrap my head around the numbers tax software wants. This shouldn't be that hard, LOL.>

Basic question...if Inv. Acct Balance (accrual) is $96k, and Inv. in Balance Sheet/Trial Balance (cash method) is $36k, shouldn't the other $60k be showing in some other account in those reports?? If I get this answered, then perhaps I can figure out how to enter into H&R Block.

Hey, @cpizzullo-pizzyp. 

Let's work together to figure out why there is differences on the reports. 

Before moving forward, do you have your account set to Accrual or Cash based accounting? Here's how to check: 

1. Go to the Gear icon in the top right-hand corner.
2. Press the Account & Settings option.
3. Tap the Advanced tab.
4. Review the Accounting Method section.

Based on which one this is set to, can be a factor in why this is occurring in your reports. If you set it to Accrual, this could be why the report is reading this way. 

I'll be waiting for your response! 

@cpizzullo-pizzyp 

This is my opinion, but you should seek the help of a good CPA on this or at least one that can confirm your status of being a cash basis taxpayer and tracking inventory.  If you get audited, you want a CPA that can testify on your behalf. 

IMO, cash basis taxpayers should not have an inventory value on their books.  If you track inventory, then you should be on accrual basis.  This is not as straightforward as you may find online.  Some people interpret the TCJA rules as allowing all cash basis taxpayers with sales of <$26M to deduct the cost of inventory when purchased.  I think that's too liberal of an interpretation of the IRS rules found here.  The IRS says that your tax method of accounting (cash or accrual) should "b) conform to the taxpayer’s method of accounting reflected in its... books and records of the taxpayer prepared in accordance with the taxpayer’s accounting procedures."  In other words, your books and records (how you track inventory) are prepared on accrual basis so your tax return should be also.   

 Here is, I think, the best article written by a CPA that explains the inventory rules since the TCJA change became effective after 12-31-2017.  Again, this is just my interpretation.