Thank you for your answer,  It is very helpful! I learned a lot.
Could you please explain more about adjustment account and COGS acount.
As you answered for my first question, you suggested "1. You can set up one account and name it Inventory Adjustment, as I noted above, and use it for Either direction (up or down $ changes)."

What type of this "adjustment account" should be? expense? income? or others?
This account should only deal with the item that have quantity on hand (QOH >0), right?
If the QOH is negative, we need post to COGS acount, not adjustment account, right?