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Super Explorer ***

Inventory opening balance recorded as a deposit

I noticed that the opening balance for inventory is showing as a deposit.  I would have expected that to be a journal entry.  I recorded the opening balance when I created the account and I probably should have just done a journal entry instead.  

 

What is the rationale to record it as a deposit?  Would it better to have a separate account type for inventory instead of using Other Current Asset?  This question is more for clarification than to make changes :)

 

Thank you!

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Best answer 01-28-2019

Accepted Solutions
Established Community Backer ***

Re: Inventory opening balance recorded as a deposit

When you say deposit, I think banking

 

If you are making the opening entry when you create the inventory item, then it posts by default to opening balance equity, the "deposit" is to the asset account listed on the item screen.

 

inventory type items do not work real well for fixed assets, there is a procedure to use it that way in the wild, but it gets overly complicated to me when you also keep depreciation

 

if you are selling the inventory items, then use inventory asset the asset account - QB works fine when you use the default accounts designed for that function

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Established Community Backer ***

Re: Inventory opening balance recorded as a deposit

"I like using a journal entry to record opening balances unless it is a bank."

 

Not for Inventory, if you intend to manage Inventory by Inventory Item Type and names. You never use JE for inventory, since there is no provision for items. And using Opening balances for accounts bypasses Functions, when there are required functions, which means No Opening balance or JE for AR, AP, Payroll or inventory.

 

You enter the Item Names without putting any On Hand as Opening. You use your transitional Physical Inventory survey and costs, make one Adjust inventory screen to populate On Hand quantity and Basis.

 

Nothing should hit Banking except your own Make Deposit and Checks that have not yet cleared the bank. Nothing about inventory hits Banking in the transition into using QB.

View solution in original post

5 Comments
Established Community Backer ***

Re: Inventory opening balance recorded as a deposit

check the asset account choice on the item screen

Inventory and assembly items have three accounts 
expense = COGS
income = your sales income account
asset = inventory asset

 

Super Explorer ***

Re: Inventory opening balance recorded as a deposit

Thanks @Rustler

 

I understand that it's an asset, the asset options are other current asset, other asset and fixed asset, and fixed asset is not for inventory.  My question was about the opening entry.  It just looks odd to record the opening balance as a deposit.

 

Thanks again!

Established Community Backer ***

Re: Inventory opening balance recorded as a deposit

When you say deposit, I think banking

 

If you are making the opening entry when you create the inventory item, then it posts by default to opening balance equity, the "deposit" is to the asset account listed on the item screen.

 

inventory type items do not work real well for fixed assets, there is a procedure to use it that way in the wild, but it gets overly complicated to me when you also keep depreciation

 

if you are selling the inventory items, then use inventory asset the asset account - QB works fine when you use the default accounts designed for that function

View solution in original post

Super Explorer ***

Re: Inventory opening balance recorded as a deposit

Thanks @Rustler!

 

Yes, the word "deposit" makes it confusing.  I like using a journal entry to record opening balances unless it is a bank.

 

Appreciate the clarification!

Established Community Backer ***

Re: Inventory opening balance recorded as a deposit

"I like using a journal entry to record opening balances unless it is a bank."

 

Not for Inventory, if you intend to manage Inventory by Inventory Item Type and names. You never use JE for inventory, since there is no provision for items. And using Opening balances for accounts bypasses Functions, when there are required functions, which means No Opening balance or JE for AR, AP, Payroll or inventory.

 

You enter the Item Names without putting any On Hand as Opening. You use your transitional Physical Inventory survey and costs, make one Adjust inventory screen to populate On Hand quantity and Basis.

 

Nothing should hit Banking except your own Make Deposit and Checks that have not yet cleared the bank. Nothing about inventory hits Banking in the transition into using QB.

View solution in original post

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