Average cost, inventory asset account value, or COGS incorrect (or zero)

Legacy KB ID: 599

Question

Why do my QuickBooks reports or chart of accounts totals show incorrect numbers (or zero) for average cost, inventory asset account value, or cost of goods sold (COGS)?

Answer

An inventory item was created without a value for quantity on hand, and the first transaction to use the item was an invoice instead of a bill. This situation can occur when you sell products before you purchase them. When you create a bill for an inventory item before you create invoices including that item, QuickBooks "locks" the cost in place for future calculations. If the cost is not locked in this manner, the average cost (and the inventory asset account value) is subject to change whenever the item’s quantity on hand is negative or whenever the cost of the item changes (either on bills or cheques, or through editing the item). The program is functioning as designed. This situation does not occur if the first transaction to use the item is a bill, or if the item is created with an initial quantity on hand (which would create an inventory adjustment automatically). If your inventory reports are incorrect because of the situation described above, you can cause them to display the correct values by making sure the earliest dated transaction to use an item is a bill: 1. From the QuickBooks Reports menu, choose Inventory, and then choose Inventory Valuation Summary. 2. QuickZoom an item that is showing incorrect values by double-clicking the item name. This opens the Inventory Valuation Detail report for the item. The transactions associated with this item are listed in order by date. 3. QuickZoom the first bill listed to open the Enter Bills window. 4. Change the date on the bill to a date earlier than the first invoice listed on the detail report you opened in Step 2. 5. Click Save & Close to record the bill with the new date. 6. Repeat Steps 2 through 5 for each incorrect item.

How did we do?

How can I change the cost price of items?

Reimbursed amount (price) for service items under time/costs.

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