- 1 What are The Common Mistakes in QuickBooks Inventory Accounting & How to Fix Them?
- 2 Fundamentals That Should Be Considered & Reviewed Initially
- 3 Common Errors
What are The Common Mistakes in QuickBooks Inventory Accounting & How to Fix Them?
Inventory such as payroll is something which consistently proves to be the problematic area, especially for clients. It is difficult to manage as everyone has to put the data consistently and timely, which is a difficult procedure.
Fundamentals That Should Be Considered & Reviewed Initially
- Firstly, make sure that you evaluate that inventory items are properly set-up in QuickBooks. Clients often set the items as type inventory, whereas item type of non-inventory will be better if opt. Non-inventory type doesn’t keep the average cost’s perpetual count.
- Secondly, verify that the value of total inventory on inventory valuation summary report is same as the inventory amount present on Balance Sheet. If there is a difference between two then several factors could be responsible for it. Client Data Review or CDR is a tool that can help you to solve this problem
- Thirdly go through Inventory Valuation Summaryin order to know about the inaccurate average costs and negative quantities
Incorrect or inconsistent procedure of Inventory
- Negative quantity shown by Inventory Valuation Summary
- Inventory Valuation Summary differs with the General Ledger
- Average cost seems to be incorrect
- Asset value doesn’t match with General Ledger
1. Compare Balance Sheet and Inventory Valuation or CDR Tool
Average costing is the only method which is available for inventory valuation in QuickBooks. Inventory Valuation Summary Report helps in summarizing the average cost, extended value and quantity of the quantity of inventory and also provide the valuation of total inventory.
Total asset value present on this particular report should be same as to the balance sheet value for the inventory. Ensure that these two reports are created with same date and time settings, in case the data is entered by other users at the same time in QuickBooks.
Link to the report shows the, transactions that are using the inventory asset account but does not show the inventory items, helps you to see the report where all the transactions are listed, for example: Bill, Check or Journal Entry, that were posted to the account of Inventory Asset and didn’t have any affect on the item of inventory.
For bills or checks make sure that you edit the transaction so that inventory item is included in item tab and the information is removed from expenses tab. If journal entry is posted to the account of inventory asset, then keep in mind that you should either void or delete the journal entry and inventory adjustment should be made for an appropriate item.
3. Troubleshoot Inventory: CDR Tool
Many problems could be created because of the improper recording of sale or purchase inventory items in the QuickBooks. An inventory item’s negative quantity can also lead to a problem and also have an impact on how the calculation of average cost will be done by QuickBooks.
Now, identifying that specific transaction or item that is causing the negative situation of inventory can take lots of your time. With troubleshoot inventory tool, you can conveniently find the inventory errors.
Need Professional Help?
If you get stuck anywhere in the process, feel free to get in touch with SMBAccountants Team, Which is available 24/7.
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