where the data for quantity reduction and inventory update in the sales report and cost report are read from?

In QuickBooks Online (QBO), the data for quantity reduction and inventory updates in sales and cost reports are sourced from your inventory records, Richard. I am pleased to share some information.

When you make sales or purchase transactions, QBO automatically adjusts the inventory quantities based on these transactions. Purchasing an item increases the quantity of inventory you have. If you decide to sell, it can help boost your sales or income by generating revenue from the sale but it will decrease the inventory quantity.

On the other hand, the unit price in the report is indeed from the purchase transaction that helps calculate the cost of goods sold.

For quantity updates, QBO tracks the changes in inventory levels through sales and purchase transactions, as well as manual adjustments you make to the inventory quantities.

Moreover, you can run inventory reports to get a comprehensive overview of your item's status. You can also adjust inventory quantity on hand so you can manually adjust an item's quantity without recording a purchase or sale.

Additionally, you can take advantage of our QuickBooks Live Expert Assisted services anytime if you require further assistance organizing your entries for an accurate record of your transactions.

It's a great opportunity to chitchat with you about inventories. Never hesitate to return once you have further questions. We're here to help.

Thank you for your reply and I have another question. After creating a purchase contract, will the inventory quantity be automatically updated to the product list? If we manually adjust the inventory quantity midway, will it affect the sales report and the reading of the inventory quantity?

Where is the inventory quantity read from? From the purchase contract or the product list?

Your attentiveness in this thread is much appreciated, Richard. I'll relay further clarifications about your query regarding inventory quantity and how you can review them.

When you create a purchasing or sales transaction, its associated item and recorded value will directly affect your inventory quantity. With that, your product list will be updated automatically after generating inventory-affecting transactions.

Furthermore, altering your inventory count before creating any transactions could cause incorrect data in your product list and reports. The sole purpose of the platform's inventory adjustment function is to correct any inventory discrepancies.

Moreover, reviewing your previous transactions could not directly let you track your inventory status. While you can check your inventory list and its quantity by going to the Product and services menu, you can also utilize your reports to track their current value. To guide you through the process, click this link: Use reports to see your sales and inventory status in QuickBooks Online.

Finally, I've added these recourses that provide insights about modifying your item type and categorizing them according to your business preference:

• Change product and service item types in QuickBooks Online
• Group products and services into different categories in QuickBooks Online

If you have more questions about inventory quantity tracking and management, click the Reply button. The Community team is always here for you.