 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 2 2 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 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 Oh FIFO 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 and 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're gonna have to do something to fix it because the balance sheet account will not just close out at Year-end it's a permanent account. So that's just something that you want to kind of keep in mind