The inventory asset account in QuickBooks Online

What the inventory asset account holds

A count changes more than the quantity you see on an item. Intuit's article on adding inventory says the new inventory item form has an Inventory asset account dropdown, where you choose Inventory Asset. Its video describes that account as tracking the value of all the inventory you have on hand.

The value starts with the item's set-up. Intuit's article on valuation methods says that entering the wrong cost and initial quantity on an item gives an incorrect value in the inventory asset account. You correct it by editing the item's starting value.

To read the value held for each item, open the Inventory Valuation Summary. Intuit's reports article describes it as showing the quantity on hand, value and average cost for each product. For the count-day comparison, see the guide to QuickBooks Online inventory limitations and the entry on quantity on hand.

Why a count adjustment reaches it

The adjustment form asks you for an inventory adjustment account, not for the inventory asset account. Intuit's article on adjusting quantity says saving the adjustment automatically records appropriate adjustments to the Inventory Asset and Cost of Goods Sold accounts.

So an adjustment changes the value QuickBooks Online holds for your stock, and not only an item's quantity. That is why your accountant asks what is behind each one. The guide to adjusting inventory quantity covers the form itself. For a loss, see the guide to recording inventory shrinkage.

Where Count stands

When InventoryWare Count sends an adjustment, you choose the inventory adjustment account from the company's Cost of Goods Sold and Expense accounts in QuickBooks Online, the same kind of choice the QuickBooks Online form asks you for.