FAQs Related to Inventory
Q1: Which forms have an affect on inventory counts (Quantity on Hand)?
A: Here is a list of every form that affects Inventory counts (numbers). There are other forms that affect inventory on the GJ (dollar values).
- Non-Serialized Inventory Adjustments
- Serialized Inventory Adjustments
- Sales Receipts
- Credit Memos/Refunds
- Item Receipts
- Vendor Credits
- Credit Card Charges
- Credit Card Credits
Q2: Why do Balance Sheet and Inventory Valuation reports show different amounts for Inventory Asset account?
A: Check these possibilities.
- You have transactions to Inventory Asset account that do not have inventory items.
- You have inactive inventory items that have a non-zero value.
The troubleshooting steps will depend on the cause of discrepancy.
Look for transactions to an Inventory Asset account that do not have inventory items. The Balance Sheet report draws information from the accounts whether they are associated with items or not. The Inventory Valuation reports, however, draw information from items only. This means that transactions using inventory items show on both reports but transactions without inventory items show only on the Balance Sheet report.
Some examples of transactions that will show on the Balance sheet but not the Inventory Valuation reports are as follows:
- Bills, checks credit card charges with the Inventory Asset account on the Expenses Tab.
- Journal entries using the Inventory Asset account.
- Inventory adjustments offset to the Inventory Asset account instead of a COGS account.
To fix the issue, try one these recommended solutions:
Solution 1: Use the Balance Sheet and Inventory Valuation reports to find all transactions causing the discrepancy
Solution 2: Find bills or checks that affected the Inventory Asset account without using items
Solution 3: Find and correct journal entries that affected the Inventory Asset account without using items
Solution 4: Find and correct inventory adjustments that use the Inventory Asset as the adjustment account
Solution 5: Find inventory adjustments with dates in the future
Q3: Why do we have Inactive inventory items that have a non-zero value?
A: The Balance Sheet report displays both active and inactive inventory, but the Inventory Valuation Summary report can include inactive and active inventory items. The value of an inactive item is included in the Balance Sheet because it affects the Inventory Account but it is not included in the Inventory reports because it is inactive.
To fix the discrepancy, try one of these solutions.
Solution 1: Reactivate the item
Solution 2: Adjust the item quantity
Q4: Why are the item counts on the Item History form different that what is on the Item > Inventory tab?
A: There are many reasons why information on forms and reports related to item counts can be different, without any of them necessarily being incorrect. Here are many of the things to check and keep in mind.
- Please note that different forms and reports show information in different ways. This is because each of them may have a different purpose. They may not match.
- Go to Reports > Company > Items Inventory History Report. This reports will show you all activity for that item. The numbers on this report should be correct.
- When checking numbers, be sure to look at any form that has a Qty. OH field. Be sure to look at Item Adjustments. If you are trying to figure out why quantities may be incorrect, note that only Item Adjustment “Quantity” types will affect Qty. OH.
- Do you have any warehouses that are inactivated with items that have a positive or negative quantity on hand? Inactive warehouses are not included in the Item > Inventory tab but the transactions from inactive warehouses are included in the history form and various reports.
- Does your company sell items that are out of stock? When you do not have an item in stock and you sell it, your Qty. OH becomes a negative number. This will cause problems and create discrepancies. Be sure that you have the preference that allows this action turned off. Do not allow selling items that are not in stock.
- Double check the Date Range in the Item History form and any reports you are relying on for your analysis.
- The Unit of Measure (UOM) feature can cause a lot of confusion. Please be sure to keep UOM in mind when examining quantities of items purchased and sold.
- Item Reservations and Open Purchase Orders don’t affect Qty. OH.
- In Item History > Avg. Cost History, the Ending Qty. OH may not match your current Qty. OH. This is due to how the tab calculated quantity. It is looking at transactions that affect your Average Cost and not necessarily your Qty. OH.
- When looking at Bills and Invoices, please remember to pay attention to Customer Credits and Vendors credits. Invoice Credits are likely increasing your Qty. OH. Vendor Credit is likely decreasing your Qty. OH (quantity on-hand).
Q5: We received items in the form of a donation and a cost was recorded to them. We now have an amount sitting in the inventory account. How do I move this amount from the inventory account to a contribution expense?
A: Typically, when entering items received through donation, you would enter in inventory adjustment and select the account you would like to affect. If the item was donated, it is generally of no cost to you and the unit cost on the adjustment would be zero. No accounts would be affected at this point. If a cost was entered, an account would have been selected in the the adjustment account. If the inventory account is overstated due to the donation amount, an adjusting journal entry can be created to move the asset to the appropriate expense account.
As this entry is affecting account and could impact prior reporting periods, it is advised to speak with your trusted accountant to verify the entries to be made.