You're diving right into QuickBooks and I love it! This may be the article that you came across. Give it a gander and see if it looks familiar: Set up and track your inventory
As for having variances in your products, in this case, it'll probably best serve you to set up the shirt colours as individual items. For example you could have something like this.
In this case, I've put both the name of the item and the colour in the Name field of the item setup to ensure that the customer is able to see both the item type and colour. It would look something like this.
While you can use the category option when you're setting up inventory, that's more for internal reference. Here's another shirt that I set up, putting only the colour in the Name field and then using the Category to signify it's a shirt. On the invoice you see, it looks fine because you can see both details.
Now let's take a look at what your customer would see.
That might not make a whole lot of sense to them, right? It's up to you how you'd like to configure it, but it sounds to me like you're looking for the first option, not the second. In both instances, the items will still appear in the drop-down menu on the line, but how they appear to the customer makes a difference.
As for reports, QuickBooks Online does have reports for your inventory, such as the Inventory Valuation report and the Physical Inventory Worksheet report. This article explains: Use reports to see your sales and inventory status
For your reference as well, inventory in QuickBooks Online works with FIFO tracking, which you can read more about here: What is FIFO and how is it used for inventory cost accounting?
Whether we keep working in community and on this thread is your call. It might help to have different threads for different questions. It may even be easier for you to take advantage of the QuickBooks Online support teams outside of community so you can really get in depth with your questions and how you'd like to set things up. There's no charge and the options are phone, chat, and social media messaging. My team and I, the QuickBooks Team here in community, are a part of the social media team as well if you'd like to reach out to me or connect with one of them.
Phone and chat: Click Contact Us to learn how to reach phone and chat support.
Schedule a Callback: click (?)Help in the upper right > click Contact Us > explain your situation > click Let's Talk > choose Get a callback (Note: Callback hours are the same as regular phone hours.)
Go with whichever option works best for you! The one thing to keep in mind about community is it's a public forum that's not necessarily designed for in-depth troubleshooting, so there may be times we would direct you to the other support options anyway. All the same, we're here to help you get on track. :)