Not only is it tricky, it seems to mystify many people. I have no doubt that is why our number 1 video on YouTube is about inventory.
http://www.youtube.com/watch?v=_BlBSl0OaFIYou really have to know your debits and credits in this area because with each transaction you are dealing with multiple accounts:
For example,
Posting an Invoice: the following accounts are affected in a single transaction:
- Sales
- Accounts Receivable
- Inventory
- Cost of goods Sold
You have to deal with receiving inventory, possibly PO's (non-posting) and managing open vs. closed PO's as well as back-orders and then you have to be able to take periodic inventory counts and then update QuickBooks with the correct quantities, but wait - did you remember to take into account the orders that came in while you were counting and the orders that shipped out while you were counting? So it can get confusing and overwhelming very Quickly especially in QuickBooks where the inventory tracking is not the most dynamic. Often times companies will track inventory using other proprietary software and just update Quickbooks periodically so that the balance sheet is accurate at least as of important cut-off dates.
QuickBooks CAN be used to track inventory and it can actually do it pretty well, but you really have to have a good understanding of the transactions in order to know how to maintain it well in QuickBooks.
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