I've got an interesting inventory questions.
Assuming inventory is activated in QB, what happens when the cost (as opposed to sales price) of an item is changed? does it re-price/ revalue the inventory already in stock? or does it just use that cost going forward for new items received?
thanks Ian
QB does not do FIFO or LIFO valuation. If you need either, look for other software.
It uses that cost to recalculate the average cost of the item.
Greetings
Question??? Are you saying it uses weighted moving average?? Are you saying it uses neither? QB promotes itself as an accounting package so which rules are available??
I ask because I am now into a company that uses QB and looks like it will be poison of choice for awhile, this will come up and may become a surprise
Ken
QB uses average cost to value inventory. Has no other option. If the company already exists and has been using something else to value inventory then the permission of the IRS will be needed to use QB.
If I purchase 10 widgets at $2 my inventory value is $20.
Next week the price increase to $3 and I buy 10 more widget. The value of the new inventory is $30.
If i were to look at the QB value it would tell me the total value is $50. The value of one widge would be the average $50/20 = $2.50.
Does that sound about right?
thanks Ian
That is correct.
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