 QuickBooks Online 2023 Inventory Reports Get ready to start moving on up with QuickBooks Online. We're going to be using the free QuickBooks Online Test Drives Searching in our online search engine for QuickBooks Online Test Drives Selecting the option that has Intuit.com and the URL into it being the owner of QuickBooks Support Accounting Instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course Each course then organized in a logical, reasonable fashion making it much more easy to find what you need than can be done on a YouTube page We also include added resources such as Excel practice problems PDF files and more like QuickBooks backup files when applicable So once again click the link below for a free month membership to our website and all the content on it Picking the United States version of the software and verifying that we're not a robot Zooming in by holding down control up on the scroll wheel currently at 125% on the zoom in cog dropdown just to note that we're in the accountant view as opposed to the business view We'll try to toggle back and forth between the two views so you can see where stuff's located within both of them We're going to tab on the top and click right click to duplicate the tab and then we're going to right click the duplicate the duplicated tab as we do every time to put reports in our tabs back to the tab to the middle opening up the major financial statement reports reports on the left balance sheet on the right as that's thinking tab to the right reports on the left this time the P to the L the profit to the loss the income statement closing up the hamburger otherwise known as the hamburger changing that range from 010122 tab 123122 tab and run it because you want to refresh it and then tab to the left closing up the hamburger and changing the range in 010122 tab 123122 tab and run it that's the setup process we do every time recalling these two financial statement reports the balance sheet income statement our major two reports most other reports given more information on one or multiple line items within these two this time we're looking at the balance sheet report and the inventory line item we're going to be looking at reports that provide sub ledgers giving us more detail on the inventory line items now we have to of course go over the whole inventory process once again to think about when these other reports would be applicable clearly you wouldn't have the sub ledger reports breaking inventory out by unit if you're not tracking inventory within the QuickBooks system so let's just first give a recap of how inventory might work by going to a flow chart over here this is just a flow chart to look at the vendor cycle and the customer cycle noting that inventory is going to be crossing over between these two cycles we're going to be purchasing the inventory which is part of the vendor cycle cash going out for goods and services we're purchasing and then inventory is going to impact the customer cycle because we're going to sell the inventory and record the expense of the inventory cost of goods sold at that point in time now there's a couple ways that we could do this first of all you might not have inventory in that case clearly we wouldn't have the more complication of having to track inventory if we sell inventory the easiest thing you can do is try to stay still on a cash based system which would only work if you're not having a lot of inventory for example if you do custom jobs you buy stuff specifically for the job that you are doing then when you buy the inventory up in the vendor cycle you might just expense them as you purchase them as you enter the bill as you enter the check or expense form and then when you make a sale you will have already expensed the cost of goods sold in essence and you'll just record the revenue side here therefore you don't have to track the asset of inventory that would only work however if you have a just in time system a custom kind of inventory system in that case however if you're tracking larger amounts of inventory on hand then typically you have to deviate to an accrual system putting the inventory on the books as an asset when you purchase the inventory and then when you sell the inventory you're going to decrease the asset and record the cost of goods sold however there's two methods you can use to do that one is a perpetual one is a first is a periodic inventory system in that case it would be more simplified within QuickBooks and then you got the perpetual inventory system which tracks everything in QuickBooks if you did a periodic inventory system when you buy the inventory with a bill check or expense form then you would record the inventory to the inventory account but not be turning on the tracking of inventory not recording the units of inventory in the QuickBooks system you would be doing that instead outside of QuickBooks possibly on an Excel worksheet or something like that and then when you sell the inventory you would just be selling it and not decreasing the inventory units just recording sales and then when you do a physical count of your inventory external to QuickBooks on Excel or something you do your cost of goods sold calculation beginning inventory plus purchases minus ending inventory the physical count gives you your cost of goods sold you would do a periodic adjustment then at the end of the day week month decreasing inventory and recording cost of goods sold periodically then you've got the full service inventory tracking inventory within the system in that case when you purchase inventory with a bill form check form expense form you're going to be increasing not only the inventory account but also the sub ledger which will track the inventory by unit as well and then when you sell the inventory you're going to be decreasing the inventory account perpetually on a perpetual inventory system as opposed to at the end of the night week or month each time you make a sale and that's the perpetual inventory system now to do the perpetual inventory system you got to make sure that you turn on the inventory tracking you've got to make sure that you set up your inventory items properly to be tracked and then when you make the purchase you've got to use items to purchase using the bill form the check form the expense form and when you make sales you got to make sure you make the sales with the invoices and sales receipts as opposed to deposit forms so that it can then decrease the proper inventory decreases and you still need to do a physical count to check that there weren't for shrinkage and lost and theft items and what not okay given that information then our inventory is here we're going to give more detail because we're imagining we're using the perpetual inventory system and therefore we have our sub ledger reports let's go to the tab to the right right click on it and duplicate it to open another report which will be our inventory reports I go to the reports here now usually I like to just type in inventory up top how I typically do it so I'll go up top and just type in inventory and you've got your three reports here you got your inventory valuation you've got your inventory valuation detail and you've got your physical inventory worksheet the valuation summary is the one that we'll start off with which usually ties into what's on the balance sheet let's run it for the end of the period so this is 1231 222 and run it to refresh it now note that this report is as of a period of time it's a balance sheet report it's not reporting performance it's not showing what we have sold over a time frame it's showing us where we stand so it should tie out to what's on the balance sheet in essence so we've got our inventory items here now notice they're grouped together and that's because when we set up the inventory we set up these these groups or categories they call them if I go to the first tab just to check that out we go to the sales on the left and we go to the products and services these are the things that we set up in order to populate our inventory items on bills and invoice sales receipts checks and expense forms you can see these groups these categories that we put into place and that then will help us categorize them in our reports as well grouping them thusly and so then we've got the number we've got the quantity so this is the units that we have on hand this is the added level of detail you would not have on if you weren't tracking in the system we wouldn't know the units we would just know the dollar amounts when we purchase and then when we sell the inventory we run into a problem because we have to have a flow assumption life of life of average and so on in order to calculate the decrease and then this is going to be then the asset value and the the calculation of the average so if I pull out the trusty calculator here trusty calculator and I'm going to make it a little bit smaller so that means then that this calculation of the average is just basically taking the 250 asset value you know divided by 25 and that gives us our 10 for the average here the total down below in in dollar amount is the 596 25 this is what we buy them for this is not what we sell them for so if I go then back to the balance sheet that should tie out here and that's going to be our sub ledger note that it's it's similar that it's a balance sheet account to the accounts receivable but remember accounts receivable kind of forces us to have a sub ledger that will tie out by making us every time we hit the accounts receivable account this is the accounts receivable not payable it will force us to add a customer so quick books can make the sub ledger breaking out by customer that's not necessarily the case with inventory so you got to be more careful it is possible for you to enter something like a journal entry simply to inventory and then throw off your your inventory account to the sub ledger and you want to be really careful of doing that more careful even so then we saw on some of the income statement accounts when we talked about income and the sub ledgers of income and the sub ledgers for the expense breaking out income by customer or item breaking out expenses by vendor we said that these these ones also quick books doesn't force us to make the sub ledgers tie out but it's usually not as big a deal on the income statement because the income statement rolls into the balance sheet we start over every year and so so we can kind of fix it periodically the balance sheet accounts you can't do that so much if your inventory gets out of whack then you've got to you have to do something to fix it because the balance sheet account will not just close out at your end it's a permanent account so that's just something that you want to kind of keep in mind okay so I'm going to close this one out and let's open up let's go let's see if I can go back to the reports here on the tab to the right and reports and I'm just going to type in inventory again so inventory and this look this time let's look at the inventory valuation detail report changing the range up top from 010122 tab 123122 tab and run it so this one shows us activity now so now we're not really just at a point in time we're still looking at something that's that's tight that's coming from the balance sheet account of inventory but we've added a time factor because we want to see the detail that's increasing and decreasing the inventory items themselves so if I go into the first one we're under designs we've got the pump we've got the inventory quantity adjustment so that's what they put that's how they used to start the inventory to put the beginning balance in place in the practice file and then you've got the checks that were used to purchase the inventory so note what you have up top you've got the quantity and then you've got the rate that they were purchased at notice what we're using is a FIFO cost flow method as opposed to a weighted average method or a LIFO method FIFO and weighted average are probably the most common kind of inventory flow assumptions and the flow assumptions become important because if you have a bunch of things that are the same then the price of them is usually going to go up over time all else equal due to inflation and so then the question is well how are you going to determine the cost of the thing that you sold if you just picked a pump and they're all the same but they cost different amounts due to perhaps inflation for example well we have to use a flow assumption FIFO and weighted average of our common flow assumptions so we have the FIFO amount here then and then the quantity on hand started at the 16 and the asset value so then we purchased more of them we purchased three of them the rate stayed the same so we don't have like a different level they're all still $10 because we didn't have that problem of the price changing over time so we don't really have a real problem with the assumption method until the price changes but just to give an idea of it now you've got the FIFO cost is going to be 30 which is 10 times 3 and then the quantity on hand is now 16 plus the 3 which is now on 19 and then the asset value out 190 which is the 160 plus the 30 and so on so then we had a bill which is another purchase increasing they still cost $10 FIFO cost is 80 which is 10 times 8 the quantity on hand now went up by 8 from 19 to 27 and then here we have an invoice that means it went down we sold one of them they cost $10 we don't have a problem with having different cost amounts if there was an issue where we paid more for example we would use the we would have to use the first and first out the older cost kind of assumption would be the idea and now the FIFO costs would be 10 in that case that's how they're determining under a perpetual inventory system the cost of the inventory item and then and then you got the quantity on hand went down from 27 by 1 and so on so you can kind of see how your your flow assumptions work by by going into this report and looking at the activity of the increases and the decreases to your inventory accounts it becomes most interesting when you have a situation like this where the cost changed over time or like this one so notice this one we had $10 units and then we bought 25 more and the cost went up significantly and then when we sold them we sold them for the $10 because we sold the older ones that older ones which are usually the cheaper ones if there's if there's if it's an inflation thing that's increasing the price over time so once we eat once we eat into or sell all the older ones then we'll sell the newer ones which are like the more expensive ones even though the same type of units so there is the inventory flow assumptions let's go back to our reports and then go into the inventory again and look at the inventory worksheet close in the hamburger so this gives us like our list of inventory the quantity on hand which could be useful to do a physical count now note that as you're doing a perpetual inventory system you're tracking the inventory units real time that doesn't mean you don't need to do a physical count though because obviously if the physical count comes out to 18 units and your system says 25 you're not going to say oh well my system's right you know the fit my eyeballs are wrong that would be like listen to a politician or something oh you're right my eyeballs are wrong you know you got to say well no I guess the we lost some something happened here so we're gonna have to do a physical count and then write it down in accordance with the physical count and if you might want to have someone doing a physical count that doesn't actually have the units on hand if you're assigning this to some random person to count them so that they can't just not count anything and just say hey yeah you have 25 units right you just you want them to count it separately so so that they don't know how many are there and then you can have more assurance that possibly it's right and you would think that there would be there would be shrinkage spoilage and so on in the physical count and if there were then we'd have to make an adjustment now if I go to the first tab over here and I'm in if I if I look at the sales tab and then I'm in my products and services then we can see the items that have inventory because they're gonna have a quantity on hand so there's our quantity items and if we needed to adjust them to the physical count I can hit the drop down here and basically adjust make an adjustment so I can say quantity adjustment and then I could go in here and and make my adjustment to the physical amount as we saw in a prior presentation with that type of form so the new quantity would be whatever 18 and then we could say okay the rest there was a shrinkage a loss something happened for seven units we got to figure out what that is but we got to write it down to the physical amount at this point in time okay so let's just go back to the cog drop down and go to the switch to the business view just so we can see where stuffs located in the business view and so we've got the get things done page we don't call it home we get things done there in my experience people don't get things done at home so I get stuff done at home but that's just because I had to throw out the Xbox in order to have for that to happen any case there's the home page we got the business overview that's where your reports are located in the business overview we've also been looking down here in the get paid pay area to look at the inventory which is under the get paid products and services tab there's the products and services we've looked at that and the and I think those are the main places that we've been going here so that's where you can find them under the business view