Managing Inventory

As you record inventory purchases and sales in QuickBooks, the program keeps track of your inventory, just as the point-of-service system at the grocery store does when a cashier scans items. This chapter begins by explaining how to

turn on QuickBooks’ inventory features and set up inventory items in your company file so the program can work this magic.

Unless you practice just-in-time inventory management, you need inventory in your
warehouse to fill customer orders. If you follow the lead of many companies, you start by creating purchase orders for the inventory you buy so you can verify that you receive what you’re supposed to. The next step in the inventory process is receiving the inventory and paying for it. Finally, all that work pays off when you sell products out of inventory to your customers. This chapter shows you how to create purchase orders, receive inventory, and pay for it. You’ll learn what the program does to track how much inventory you have (and what that inventory is worth) as you record all these transactions. Recording inventory sales is just like recording any other sales; QuickBooks handles the money transfers between accounts behind the scenes.

Good inventory management means more than just updating the number of items that QuickBooks thinks you have on hand. To keep the right number of items in stock, you also need to know how many you’ve sold and how many are on order. And to make decisions like how much to charge or which vendor to use, you have to evaluate your purchases and how much you pay for your inventory. QuickBooks’ inventory reports and Inventory Center help you look at your inventory items and transactions. In this chapter, you’ll learn how to make the most of both of these features.

Another important aspect of inventory is keeping your QuickBooks records in sync with what’s sitting on the shelves in your warehouse. Inventory can go missing due to theft or damage, so you might not have as many products in stock as you think you do. QuickBooks can’t help with the dusty business of rifling through boxes and counting carafes, coffee mugs, and the occasional centipede. But after the counting is complete, the program can help you adjust its records to match the reality in your warehouse. And adjusting inventory is useful for more than just inventory counts. You can also use this process to write off inventory that you have in your warehouse but can’t sell because it’s dented, dirty, or too darned ugly.