Inventory

Preview · from QuickBooks® Online Step-by-Step

We have already touched on Inventory products several times throughout this book. In this chapter, you will learn additional tools to understand and manage your Products and Inventory in QuickBooks® Online.

In this chapter

• Do You REALLY Need to Track Inventory?
• Managing Inventory
• Setting up Inventory Products
• Calculating FIFO Inventory
• Buying and Selling Inventory Products
• Using Purchase Orders
• Updating Inventory Calculations
• Adjusting Inventory
• Inventory Reports
• Do It Yourself: Inventory

Chapter review: Inventory tracking, FIFO costing, purchase orders, and quantity adjustments

13 practice questions. The answers are in the book.

1. Which Product or Service type should be selected when adding a new item that you buy and/or sell but don’t keep track of in inventory?

   • Service.
   • Inventory.
   • Non-inventory.
   • Bundle.

2. QuickBooks® Online tracks inventory using which of these methods by default?

   • First In, First Out.
   • Last In, First Out.
   • Average Cost.
   • All of the above.

3. When you sell a product, how does QBO calculate the cost to move from Inventory Asset to Cost of Goods?

   • It averages the prices you paid for all your stock.
   • It uses the price you paid for the newest items in stock.
   • It uses the price you paid for the oldest items in stock.
   • It uses the price the customer is paying.

4. To activate QuickBooks® Online’s Inventory:

   • Turn it on in the Home screen.
   • Turn it on in Account and Settings > Advanced.
   • Turn it on in the Products and Services list.
   • Turn it on in Account and Settings > Sales.

5. The Inventory Asset account:

   • Tracks open purchase orders of inventory items.
   • Decreases when inventory is purchased.
   • Increases when inventory is sold.
   • Increases when inventory is purchased.

6. In QuickBooks® Online, Inventory can do all of the following EXCEPT:

   • Provide reports on the status of each item in inventory including how many are on hand and how many are on order.
   • Tell you the location of the products in your warehouse.
   • Calculate gross profit on inventory sold.
   • Track the open purchase orders for every inventory item.

7. Which of the following statements is FALSE regarding Purchase Orders (POs)?

   • POs are held as non-posting account until you receive the product(s) ordered by creating a bill.
   • POs that include inventory items are posted to the inventory account at the end of each month.
   • You can list your open purchase orders at any time.
   • You may close a purchase order in part or in full at any time.

8. To display the window used to record inventory adjustments in QuickBooks® Online:

   • Select the Settings gear and then choose Inventory Adjustment.
   • No adjustments should ever be made. QuickBooks® Online automatically adjusts inventory each time you purchase or sell inventory items.
   • Select the Create button and then choose Inventory Adjustment.
   • Go to Account and Settings>Sales and then choose Inventory Adjustment.

9. Which of the following is NOT a report available through QuickBooks® Online?

   • Goods-In-Process Inventory by Item.
   • Physical Inventory Worksheet.
   • Inventory Valuation Summary.
   • Product QuickReport.

10. Which of the following statements is NOT true regarding the recording of receipts of inventory items?

    • How you record inventory received depends on the payment method you use.
    • You can record a bill from a purchase order even before you receive all the items ordered.
    • It's OK to have negative inventory by selling more items than you have in stock.
    • Bundles can include inventory items.

11. When entering a bill for the purchase of inventory products, which grid of the Bills window should you use?

    • Item Details.
    • Category Details.
    • Either of the above.
    • None of the above.

12. Before setting up inventory, it is a good idea to think about whether you need to track Inventory in QuickBooks® because:

    • Once you start, it is necessary to separately track every product you sell as an Inventory Product.
    • You could use Non-inventory Products if you do not need instant inventory stock status information.
    • It is better to use Inventory Products rather than Non-inventory Products when you sell custom items.
    • Your accountant needs detailed information on every product sale to be able to close your books for the year.

13. QuickBooks® Online’s Inventory tools are found in this subscription level:

    • Essentials
    • Plus
    • Advanced.
    • Both b and c.