How to adjust inventory quantity in QuickBooks Online

An inventory adjustment in QuickBooks Online changes an item's quantity on hand without recording a purchase or sale, according to Intuit's adjustment article. The decisions behind the form decide whether your accountant can follow the entry a year from now.

Intuit's article lists four things on the form. They are an adjustment date, an inventory adjustment account, a memo, and a new quantity or a change in quantity for each item. You already know where they sit. What matters after a physical count is who decides each one, and when.

Four decisions before you open the adjustment form

Use the count cutoff as the date

Set the adjustment date to the count cutoff unless your accountant says otherwise. Decide it before anyone opens the form, so every adjustment from one count carries the same date.

Check the date against your lock date first. In its lock-your-books article, Intuit says that a transaction dated on or before the lock date gets a warning or a password prompt. Which one depends on your settings.

Be careful with dates in the future. Intuit's note inside the Products and services export says Quantity on Hand is calculated at the time you export. An adjustment dated in the future can make the exported amount differ from the list in QuickBooks Online.

Pick one entry type for every line

The form takes either a new quantity or a change in quantity for each item. Use the one that matches how your variance list was written, and use it for every line.

Mixing the two is how a sign gets flipped. If the books show 50 and you counted 48, the new quantity is 48 and the change is negative 2.

A count can find more than the books show just as easily as less. Check the sign on every line against the variance list.

Intuit's adjustment article notes that Batch actions in Products and services adjusts multiple items' quantities. Whichever way you enter many items, use the same entry type for every line.

The account your accountant names

The inventory adjustment account you select is a decision for your accountant, not for the person keying the counts. Ask which account they want before count day.

Intuit's article names Inventory Shrinkage only once, in parentheses, in its note on what saving an adjustment records. Treat it as Intuit's note, because the right account depends on how your accountant books the difference.

A memo that traces back to the count sheet

If you enter the adjustment by hand, put the count plan name and the cutoff date in the memo. Then the line traces back to a count sheet and a variance list. A send from Count writes its own memo, described below.

A reader opening the entry later has only the memo to go on. Write it for that person.

The form takes one number per item

QuickBooks Online does not track inventory by location within a warehouse. The inventory adjustment form takes one number per item. Your count sheets record quantities by location, so you sum each item's locations to get its one number.

The hand method is to sum by item, compare with the books, recount and adjust. It is written out in full in the QuickBooks Online inventory limitations guide.

If your company shows an Inventory counts option under Products and services, Intuit's instructions have you pick all products or a subset, enter a New Quantity for each, and finalize. Finalizing creates an Inventory Quantity Adjustment, as Intuit's inventory count article describes. Intuit's instructions have no step for recording a location, assigning a counter, recounting or approving a variance.

After you save: finding, editing and deleting an adjustment

Intuit's note says that saving the adjustment records entries to your Inventory Asset and Cost of Goods Sold accounts. Intuit's article says to be very careful when editing inventory adjustment entries. Editing can greatly impact your accounting, so reach out to an accountant if you are unsure.

To find a past adjustment, Intuit's article has you use Advanced search with the transaction type Inventory Quantity Adjustment and the account. From there you can edit previous adjustments, add new ones or delete the adjustment. Intuit marks a memo explaining the edit as optional.

Treat a recount after you save as a second adjustment with its own memo, not an edit of the first. The first entry then shows what you believed on count day, and the second shows what the recount changed.

Show your accountant the count sheets and the variance list before anything is saved. They can then agree the date and the account while the numbers are still open.

Look at items with a negative quantity on hand before the count starts. Intuit's negative-inventory article says "if the quantity on hand is less than zero, you have negative inventory". It also says "In QuickBooks Online, you can accidentally oversell products." Note which items were negative. Your accountant will then see why their variances are large.

How Count posts the adjustment

InventoryWare Count connects to QuickBooks Online and imports items with their QuickBooks quantity on hand. The adjustment compares each counted total with that QuickBooks quantity.

Counted quantities are recorded against locations, and Count sums them per item. That is how a count by location reaches a form that takes one number per item.

A send creates one Inventory Quantity Adjustment in QuickBooks Online. It has one line per item that is linked to a QuickBooks Online item and is still an approved discrepancy at send time. Each line carries the counted total as its new quantity.

The post date defaults to the count plan's completed date, and you can change it before sending. The inventory adjustment account you select for the send is chosen from the company's Cost of Goods Sold and Expense accounts in QuickBooks Online.

Count writes the memo itself. It holds the count plan's name, its completed date and the counters' names (the first three, then how many more).

What posts and what stays behind

Count posts adjustments only once the count plan is complete. Nothing posts while the count is running, and nothing posts until a manager approves the discrepancy.

Count posts per line, and only approved lines post. Unreviewed and ignored lines stay behind and can be sent later once approved, and one approved line is enough to send.

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

An approval is tied to the counted quantity it approved. A recount that changes that quantity voids the approval, and the line does not send until it is approved again. Only a count manager or the company owner can approve a discrepancy.

An item that nobody counted is never adjusted automatically. An item that QuickBooks shows in stock and nobody counted is listed as a possible missing item. It is sent as zero only after a manager approves it as zero. A manager can ignore an uncounted item so it stays out of the adjustment.

Only items linked to a QuickBooks Online item are posted. An item with no QuickBooks link is skipped at send. A later sync can link it to a QuickBooks item of the same name.

Sync before the count, not during it

A QuickBooks Online sync runs when a company owner or admin starts it from the QuickBooks integration page. Nothing else schedules a sync. A sync refreshes the QuickBooks quantity Count holds for each linked item. It also refreshes the item's average unit cost when QuickBooks Online has one. It does not change the Count item's own item number or description.

At send time, Count recomputes which lines are discrepancies against the last-synced QuickBooks quantity. A sync that changes a QuickBooks quantity changes which lines are discrepancies, not which approvals stand. A line whose counted total now matches drops out of the send. A line that is still discrepant keeps its approval.

Our recommendation is to sync QuickBooks Online before the count starts. Do not sync again until the approved lines have been sent.