Posted 1/7/2019 05:53 (#7226139 - in reply to #7225952) Subject: RE: QuickBooks inventory adjust question
(1) Are you using QuickBooks for cash basis or accrual accounting? If cash basis, then yes it makes sense to throw away the dollar value of the inventory adjustment instead of posting it to expense.
(2) Are you adjusting the value of raised inventories like grain in the bin, or resale inventories (resale livestock). Resale inventories need to be maintained at their purchase cost for proper accounting for income tax purposes: so QuickBooks can automatically accumulate a total for "Cost of items held for resale". (The way to adjust resale inventories to prepare a market value balance sheet is by setting up a dummy Item(s) or account(s) specifically for entering the adjustments.)
If cash basis and working with raised inventories (not purchased for resale), use an equity account as the Adjustment Account in the Inventory Adjustment window to throw away the income effects of the inventory adjustment.
All of this is discussed in Volumes II (raised inventories) and III (resale inventories) of The QuickBooks Farm Accounting Cookbook™ series.