How to calculate inventory accuracy from a count

How the calculation is put together

Take the number of items whose counted total matched the books. Divide it by the number of items on your books, including any you looked for and did not find. That is one common way to calculate inventory accuracy, and there are others. Pick your way and write it down before count day.

You also choose whether to score by item or by unit. Scoring each item as a match or not, with every miss counting the same, answers how many items are right. Adding up how far off each item is, in units, answers how much stock is off.

The two can disagree for the same count. An item short by a hundred units and an item short by one unit weigh the same under the first reading and very differently under the second.

Next, decide how to score a location mismatch. QuickBooks Online Simple Start, Essentials, Plus and Advanced do not track inventory by location within a warehouse. See Intuit's article on adjusting inventory quantity. You count by location, so add up what you counted for each item across its locations into one counted total, then compare that total with the books.

An item can be right in total and still sit in the wrong location. Record accuracy asks whether the quantity is right, and location accuracy asks whether it sits where your own location list says. Decide before count day whether a wrong location counts as a miss, and say so in the count instructions.

Last, write down when the books number was taken. For the Products and services export, the note inside the exported file reads: "Quantity on Hand is calculated at the time you export your Products and Services list." See Intuit's export help article. Write the date and time of the export next to your count result. Your quantity on hand in QuickBooks Online is the number you are comparing against.

A worked example in plain counts

Suppose your books list 20 items and 18 of them matched what you counted. These numbers are made up for this example. They are not a typical, expected or target result.

In words, 18 of the 20 items matched. Now read the same count in units. Suppose the two items that did not match were off by one unit and by twelve units. Both are misses under the first reading, but the second reading cares about the twelve.

Accuracy is a result, not a cause

A measured accuracy tells you how many items disagree with the books. It does not tell you why. Inventory variance is the name for one item's difference, and how to reconcile variances after a physical count covers finding the causes.

Check for transactions never entered, or entered with the wrong date, before you book any difference as shrinkage. Make the adjustment only after that check. A number built on one count only describes that count. The steps for a physical inventory count are in how to do a physical inventory count.

Where Count fits

InventoryWare Count's variance report lists each item that has a variance, with its snapshot quantity, counted quantity and quantity variance, plus the location or locations where it was counted. Count adds an item's counted quantities across the plan's locations into one total, and it connects to QuickBooks Online and imports items with their QuickBooks quantity on hand.

InventoryWare Count is built for one complete physical inventory count, and posting adjustments to QuickBooks from a partial count is not available.