Thanks for getting back to us, @Eazi.
You may have entered an incorrect cost and initial quantity of the item during the initial set up. This will result in an incorrect value in the inventory asset account.
Here's how you can correct this:
- In QuickBooks Online (QBO), go to the Gear icon at the top right to get to the Products and Services.
- Click Starting Value, then tick Got it.
- Enter the item's correct quantity and cost.
- Hit Save and close to complete.
QBO uses the First In, First Out (FIFO) concept. The system will always consider the first units purchased (First In) to be the first units sold (First Out) and will adjust your assets and Cost of Goods Sold (COGS) accordingly whenever sales of inventory items are entered.
To learn more about this concept, consider checking out this article: What is FIFO and how is it used for inventory cost accounting?
Please let me know if you have any additional questions in the comment section below. I'm always here to help. Have a good one!
