How can I get the Inventory Valuation and Asset Balance to match? My client started tracking inventory this year (physical 6/30/18) and moved from Desktop to QBO Plus.

Thanks for visiting the Community, @JessP1.

I can share some insights about the Inventory Valuation and Asset balances amount.

The Inventory Valuation reports draw information from items only while the Balance Sheet report draws information from the accounts whether they are associated with items or not. This means that transactions using inventory items show on both reports but transactions without inventory items show only on the Balance Sheet report.

Here are the transactions that will show on the Balance sheet but not the Inventory Valuation reports:

• Bills, checks credit card charges with the Inventory Asset account on the Expenses Tab.
• Journal entries using the Inventory Asset account.
• Inventory adjustments offset to the Inventory Asset account instead of a COGS account.

The steps you need to perform depends on the discrepancy, but here's some recommendations you can follow:

1. Use the Balance Sheet and Inventory Valuation reports to find all transactions causing the discrepancy.
2. Find bills or checks that affected the Inventory Asset account without using items. You can edit the transaction by associating an item.
3. Find and correct journal entries that affected the Inventory Asset account without using items. Delete all transactions on the report then re-enter them through Adjust Quantity/Value on Hand.
4. Find and correct inventory adjustments that use the Inventory Asset as the adjustment account.
5. Find inventory adjustments with dates in the future. If inventory adjustments are dated in the future, change the date range to include all future adjustments, and then re-run the Inventory Valuation report.

You can also ask help from your accountant in guiding you through the steps.

That should help you check the cause of differences and how to correct it. Let us know if there's anything else you need. Have a good one!

This is very helpful thank you! 

I see journal entries in the Inventory Asset Account that I will reverse because we have physically adjusted the inventory for the first 6 mos of the year.

When I look at the Inventory Asset Account by Item and compare it to the Inventory Valuation, the variances by Item seem to be associated with the "Beginning Balance" in the Inventory Asset account. We switched from QB Desktop to QBO Plus so there is an entry for "Inventory Starting Value from Desktop" for each Item. The inventory activity within the period of 1/1/18-6/30/18, including that starting value from the transfer, matches by item between the valuation and asset account. The variance lies with the inclusion of the beginning balance in the Inventory Asset account. Another notable detail is that this company didn't track physical inventory on hand prior to this year. It was managed via journal entries to Inventory Asset/COGs. 

I'm wondering if I should be adjusting the beginning balance of the Inventory Asset since it's being captured via the "Inventory Starting Value from Desktop" auto entry that was created upon conversion? 

Sorry so many questions....thank you!

Thanks so much for your help - I meant to follow up on this last week...but, life....

I just want to be sure that I'm understanding the next steps for this beginning balance adjustment.

I would need to do a Quantity on Hand Adj, effective 1/1/18 and make each product 0 quantity, using the Inventory Asset as the 'offset' account?

If this goes awry, can I delete this adjustment? :-) I always need an escape plan.

Thanks for putting up with my 20 questions, it's very much appreciated!

I'm back!! 

So , when I went to do this on the Inventory Quantity Adjustment screen and chose the Inventory Asset Account as the offset - QBO will not let me proceed. I'm assuming there isn't a workaround for this?

My intent was to adjust the beginning balances as of 1/1/18 (the date we used to "start" inventory in QBO) and only have it affect the inventory asset and not the valuation (since this is only reflective of activity in 2018). This is because they never tracked inventory prior but of course invoices were tied to items and those hit the inventory asset account prior to 1/1/18 but this activity is not in the valuation report. 

I appreciate all who have put up with my  many questions...this has definitely been a learning tool. 

thank you!!