QuickBooks 2019 Desktop - Inactive Inventory Item Reporting

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General Ledger

QuickBooks 2018 versions offered some inventory reporting enhancements. Now, Intuit has further improved that reporting in the newly released versions of QuickBooks 2019. With a single-click, inactive inventory items can be included in Inventory Valuation Reports; which permit the total of those reports to ‘hopefully’ match the value of your Inventory Asset account(s). (I will discuss my use of the word ‘hopefully’ later in this article.)

Even though the ProAdvisor community has told QuickBooks users to 'never make an item inactive if it has quantity-on-hand,' that hasn't seemed to stop them from doing so. Most of them had no idea of the implications of their failure to follow the instructed best practice.

Previous to this year, inventory valuation reports like the Inventory Valuation Summary and Inventory Valuation Detail Report, which provided valuation of your stock, excluded any item(s) that had been made ‘inactive’ even if those items had quantities on hand. Those on-hand quantities, despite being made inactive, still represented inventory value and were computed as part of the total of their related inventory asset account. But, those quantities and values were omitted from inventory valuation reports. This meant that your inventory valuation reports couldn’t match your inventory asset account(s) if you inactive inventory items had on-hand quantities.

For 2019, QuickBooks Desktop Inventory Valuation Reports can now include inactive items along with their quantities and values so that you can balance your inventory reports against the inventory assets appearing on within your Balance Sheet and General Ledger. A checkbox for ‘Show Inactive Inventory Items’ is located on the report header to the right of the Dates and ‘Hide zero QOH’ options, as can be seen in the Inventory Valuation Summary report below. With this 'one-click,' the total inventory valuation may change right before your eyes.

News Flash: At the time of publication (of this article) it has been reported, and Insightful Accountant has confirmed, that there is a 'bug' associated with this feature. While the new feature includes inactive 'Inventory Items' in the computation it does not include inactive 'Inventory Assembly Items' (with quantities on hand) in the computation. This means that the report may still not balance to your balance sheet or general ledger.

The following illustration shows the same ‘Show Inactive Inventory Items’ option within the header of the Inventory Valuation Detail report.

While this new feature will go a long way in helping to ensure that inventory valuation reports match the values for inventory reflected in the General Ledger and Balance Sheet, there is no guarantee of such a match, that's why I used the term 'hopefully' earlier. Despite our efforts to teach 'best practices,' QuickBooks users seem to find ways to produce irregularities between their general ledger (and financial statements) and the underlying sub-ledgers which should match.

The inventory tracking features of QuickBooks are very specific. Because many of the detail reports are item-based reports, while the summary reports including the general ledger and financial statements are account based, it is possible for users to enter transactions that impact one without impacting the other. In those cases, a balance between the two can never exist.

So, even though this new (2019) option for inventory valuation reports should produce more matches, accountants, bookkeepers and business consultants including QuickBooks ProAdvisors must keep an eye out for instances when they don't match. In those cases, the most likely culprit will be some form of adjustment to the 'accounts' impacting inventory but not involving an item-based adjustment.

In one case, several years ago, I found a QuickBooks user who entered a journal entry to their Inventory Asset account with an offset against their Cost-of-Goods account at the end of every month. What they were doing was entering whatever amount was needed (debit or credit) so that the balance sheet value of inventory would match the Inventory Valuation Report. In other words they were entering an 'account adjustment' without entering an 'item adjustment' to make the account-based report match the item-based report. I never could convince that QuickBooks user how they should properly resolve the problem created by the value of all their inactive items. So, imagine what is going to happen, now that with 'one-click' they can include those inactive items in their new valuation reports?

What all of this means is that it will be critical for you to explain this new reporting option to all the QuickBooks users you work with because that 'one-click' to include this new option can significantly impact their inventory valuation reports as they have previously known them.

Graphics or other illustrations used in this article have either been prepared using a pre-release version of QuickBooks 2019 software, or were furnished and/or adapted from Intuit source content. Be aware that certain aspects of features described or illustrated herein may have changed between the pre-release software version we used and the release of QuickBooks 2019 desktop products scheduled for September 4, 2018.

This article is intended to serve as a summary of one specific QuickBooks 2019 product feature, it is not an in-depth review nor has it been written to provide instruction in the proper use of the software (or feature).

While the writer or editor may express a personal opinion within this article regarding this feature and/or the software as a whole, such personal opinion does not constitute a formal endorsement by Insightful Accountant or the publisher.