If your business involves any type of inventory, whether a huge amount or just a few items, the inventory needs to be tracked. You or your bookkeeper can use QuickBooks for storing inventory information and for adjusting inventory counts and values based on the current market. You most likely count your inventory on a regular basis and any changes should be recorded in your financial records. You don’t want to have to pay taxes on inventory that you don’t have; therefore, you should always take a regular count and adjust your records as necessary. With QuickBooks, it is a very simple process to make these adjustments.

  1. Select Lists or Vendors.
  2. Select Items under Lists or Inventory Activities under Vendors.
  3. Select Adjust Quantity/Value on Hand in the drop-down list under either Lists or Vendors.
  4. Enter the date that you made your physical count of your inventory.
  5. Select an expense account (an inventory item) from the adjustment list you opened up. This is the account you selected to track your inventory decline.
  6. Identify the customer job and class, if applicable, from the drop-down list.
  7. Type in the new physical count in the column named New Qty or enter a new value in the Qty Difference column. QuickBooks will calculate the adjusted quantity for you.
  8. Check the box named Value Adjustment if you want to see an expanded version of the open window; however, this is not necessary to change or adjust your inventory.
  9. Click the button marked Save & Close or Save & New to record your revisions.
  10. Enter the new count in the New Qty column if using the expanded method for value adjustments. This allows you to mark down the items as the market value decreases.
  11. Use the Memo text box to write a short description or note to describe what you’ve done, who was involved in counting the inventory or other notes, if necessary.

TIPS

  • It is always a good idea to keep accurate inventory records and take inventory of your supplies on a regular basis, such as once each month. You are required to pay taxes on inventory each year, so you always want to have an accurate count, along with an accurate value.
  • Tracking your inventory is also a good way to keep abreast on your sales and ensure that sales records are accurate. If you have too much or too little inventory according to sales receipts, you may be able to track the discrepancies and make the necessary adjustments. It may also help you find out whether there was any theft of your merchandise.
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Debbie Denny
I joined the Green Bay, WI office of Hawkins Ash CPAs in 2008. I am a Tax Manager and Advanced Certified QuickBooks ProAdvisor. I have been certified in QuickBooks for more than 16 years. I specialize in software consulting and training, small business accounting and tax preparation. I am also experienced in Sage 50 software.

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