How FIFO work when received item multiple time in a single day?

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@Catherine_B wrote:

 

Since you recorded a bill and the items on the same date, QuickBooks will get the most items available. In your case, QuickBooks can accommodate Qty= 15 on the Rate=6. 

 

You should really read the question. Asker got a different result to what you say the first time, then got what you describe when the bill was edited. 

And your statement "QuickBooks will get the most items available" does not make any sense, and in any case is not what happened

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@kim-z wrote:

 

 

But as I go back to Bill #1 and change the Qty from 10 to 20.

I ran the "Inventory Valuation Detail" report  again and it look something like this.

It doesn't look correct to me.

Transaction Type	Qty	Rate	FIFO Cost
Inventory Starting Value	10	5	50
Bill #1	20	6	120
Invoice #1	-15	6	-90

 

As you can see the Invoice #1 now use all item with Rate = 6.

I expected to see it use 10 Qty with Rate = 5 and another 5 Qty with Rate = 6.

Can someone help me understand how FIFO work in this scenario?

 

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I replicated your scenario in the sample co, and even after I changed the Bill to 20 I still got 5 x$6 and 10 x $5 for the COGS of the invoice. i.e there was no change.

They say to clear cache for strange behavior.

I would assume it looks at the time of the transaction if 2 are on the same date.  Maybe it looks at the modified time, instead of the create time, but in my test, I see it did not

Removed

Hi Catherine,

Thank you for clarification. I test it myself and the result is as you said.

Anyway, I've further question below.

With the FIFO, It seem like COGS can be changed.

Ex. An invoice was completed and incentive was calculated base on the cost.

Later, with some action it make the COGS change.

I would expect that when the invoice was completed, the cost was locked and the COGS should not be changed. Is there any suggestion or work around?

Or Is there a reason why QB work this way?

Regards,

Kim

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@Malcolm Ziman wrote:

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@kim-z wrote:

 

 

But as I go back to Bill #1 and change the Qty from 10 to 20.

I ran the "Inventory Valuation Detail" report  again and it look something like this.

It doesn't look correct to me.

Transaction Type	Qty	Rate	FIFO Cost
Inventory Starting Value	10	5	50
Bill #1	20	6	120
Invoice #1	-15	6	-90

 

As you can see the Invoice #1 now use all item with Rate = 6.

I expected to see it use 10 Qty with Rate = 5 and another 5 Qty with Rate = 6.

Can someone help me understand how FIFO work in this scenario?

 

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I replicated your scenario in the sample co, and even after I changed the Bill to 20 I still got 5 x$6 and 10 x $5 for the COGS of the invoice. i.e there was no change.

 

They say to clear cache for strange behavior.

 

I would assume it looks at the time of the transaction if 2 are on the same date.  Maybe it looks at the modified time, instead of the create time, but in my test, I see it did not

 

 

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Thanks Malcolm but I tested myself and get the result as per Catherine suggested.

So, It base on the purchase date first and if the purchase date is the same it base on the most items available and if it has the same number of item then i guess it base on created date (as per my experiment). 

Thanks for getting back, kim-z. 

QB works base on the current transaction created. That is why COGS would change every time you make a transaction. However, you can manually calculate the changes from the first to the recent transaction. 

Here's how:

1. Click the Gear icon and under the Tools section, choose Audit Log.
2. To easily locate for the invoice transaction you can filter the report. 
3. Choose the Date (From and To) then select these options: 
   •    Events:  Show only these events
   •    Select Transactions
   •    Show: All Transactions
4. Then click Apply. 
5. Under the HISTORY column, click the View link. 
6. From there you can look into the changes of the Qty and Rate. 

 I recommend submitting feedback about the COGS function.

The Community is around to help you if you have additional questions. 

@kim-z wrote:

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Thanks Malcolm but I tested myself and get the result as per Catherine suggested.

 

 

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First you say " I test it myself and the result is as you said."

Then you say "I tested myself and get the result as per Catherine suggested."

You are a little confused.  It's one or the other, because what Catherine said is different to what I said

Malcolm's assessment is accurate on this one, I think.

Your original question is how FIFO work when received item multiple time in a single day?

If three transaction types (inventory starting value, Bill and Invoice) happen on the same posting date, FIFO qty/cost should first come out from inventory starting value transaction because that was the first entry with "As of date" in QBO. You can't enter Bill (or Invoice) before 'As of date' in QBO.

That's how normally FIFO inventory system should work. Since it's not working that way in QBO, it's a BUG in the system. Someone needs to report this to the Product Development Team and tell them to fix it. See screenshot #1 below.

As a workaround for now, If you change the "As of date" a day early for inventory starting value transaction, it should work fine as in your 1st example. See screenshot #2 below.

Yes, there does seem to be a bug. When I did my test yesterday I entered an earlier "As of date" for the inventory starting value. If I enter the same day for all the transactions, the calculation is questionable.  It should look at the TIME of the transaction, really, which it is not doing

I would like to summarize what I've learned here.

Since I'm new to accounting. Please forgive me if I did something wrong.

From my original question "How FIFO work when received item multiple time in a single day?"

Catherine help clarified how QB FIFO work.

Base on her answer and my experiment

It works in the order of 

1) Transaction Date (Ex. Starting Value Date, Bill Date)

2) If Transaction Date is the same the most items will be used.

3) If Both Transaction Date and Number of Items is the same then create date.

vpcontroller and Malcolm help point out that it seem to be a bug 

that Bill come first before Inventory starting value.

And the workaround right now is to shift inventory start date to before the Bill date.

Thank you all for help and suggestions. 

Hi there, kim-z.

Thanks for sharing with us what you've learned from the discussion in this thread. I'm also taking notes of the points raised by our Allstars and Community backers in the earlier replies and will forward it to our engineers. 

Feel free to visit us again should you need help with QuickBooks. 

@kim-z may be new to accounting but @Catherine_B answer is simply wrong. FIFO inventory accounting system should never work like this. This is a BUG issue in QBO inventory. And should not be awarded TROPHY as Solved. I like to see this REMOVED by the moderate of this QB Community.

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@Malcolm Ziman wrote:

It should look at the TIME of the transaction, really, which it is not doing

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I realize now that the time of the transaction is not known.  All that is known is what time it was created (or modified), which is not really a determining factor. You may buy some items at 10am and more at 11am, but record the 2 transaction in the books in reverse order.

But still create time is better than using "the largest purchase" in a day, which is meaningless