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Call Quickbooks Desktop Support and Know How to Get Rid of Negative Inventory in Quickbooks

In this article you will learn, how to deal with negative inventory in QuickBooks. To know more contact QuickBooks desktop support.

Learn about its possible causes as well as its effects on your company file. The article also outlines steps to fix issues caused due to negative inventory.

Overview of Negative Inventory

Entering sales transactions before entering the corresponding purchase transactions, i.e., you sell inventory items that you do not have in stock is the reason why Negative Inventory is caused.

  • It also occurs while selling items that you have entered into your company file.
  • Using the Items Tab on an item receipt, bill, check or a credit card charge, debiting inventory and crediting A/P, Cash, or Credit Card Payable you can purchase items.
  • You cannot sell more items than you have on hand from items on invoices or on sales receipts.

Two transactions are recorded in sales transaction:

  • The debiting A/R, crediting Sales and Sales/Receivable transaction
  • The Crediting Inventory, debiting COGS and Inventory/COGS transaction
  • You run P&L and expense reports displaying the invoices and sales receipts. It records both income and the expenses incurred.
  • You run B/S reports as they record increases in inventory. They also show invoices and sales receipts because they record the decreases in inventory and item receipts, bills, checks and credit card charges.
  • Follow these steps when you are selling items that haven’t been entered into your company file.
  • The invoice helps in recording the Sales/Receivable transaction the way it is expected to.
  • QuickBooks assumes that the average cost of the items for the Inventory/COGS transaction and not on hand because:
  • Of the same average cost of the items you have on hand OR the cost of item from the list of item.
  • Using the assumed cost, QuickBooks records the Inventory/COGS transaction.
  • Purchase transaction must be recorded in an adjustment to Inventory and COGS so that it corrects the difference if the next purchase is not at the assumed cost.
  • Bill appears on the P&L and other reports that show expenses as it affects the COGS.

Please note the following:

  • The Inventory/COGS transaction report will not appear on the transaction but can be seen by running the Transaction Journal report.

Follow the steps to view negative inventory:

  • On your Balance Sheet, you can see negative inventory but it shows up on the following reports:
  • The Inventory Valuation Detail (IVD) report.
  • The ONLY report that you can use to evaluate the extent of your negative inventory is known as the IVD report. In the Quantity on Hand (QOH) column, the negative inventory shows with negative numbers.
  • In the Reports menu, select Inventory.
  • Select Inventory Valuation.

Negative Item Listing report

You can use the Negative Item Listing report if you are using QuickBooks Enterprise 15.0 and later versions. Please note that it will only display current negative quantities but NOT the past negative quantities.

  • In the Reports menu, select Inventory.
  • Now, select Negative Item Listing.
  • You can use your Inventory Center if you are using QuickBooks Premier or Enterprise 2014 or earlier without Advanced Inventory.
  • In the Vendors menu, select Inventory Activities
  • Now, select Inventory Center.
  • Change the filter from Active Inventory to Assembly to QOH <=Zero on the top left of the Inventory Center window,
  • Issues that you may encounter
  • A new inventory item without any average cost.
  • A new inventory item can be created with an Item Cost, but not without an initial QOH/VOH.
  • Without an average cost, it leaves the item.
  • Instead of a bill, check, credit card charge or Adjust Qty/Value On Hand (IAD) the first transaction uses the item as an invoice.
  • Into the negative inventory, the sale forces the item.
  • The invoice uses the Item Cost from the Item List without an average cost but with credit inventory and debit COGS.
  • For a cost different than the Item Cost, you purchase the item.
  • Incorrect Cost of Goods Sold (COGS) on your P&L report can be caused by selling inventory that you do not have has driven your Quantity On Hand (QOH) negative.
  • Without an Item Cost, create a new inventory item.
  • Without purchasing any inventory, you can sell that item.
  • QuickBooks assign an average cost of $0.00 as it has no information from which to calculate the average cost.
  • By doing this you distort your COGS and inventory.
  • You establish an average cost with a bill, check, credit card charge if not corrected. Or you may adjust Qty/Value On Hand.
  • Errors on vendor reports, caused due to negative inventory.


On the invoice, the Inventory/COGS transaction is normally there. To contain an adjusting Inventory/COGS transaction selling out-of-stock inventory causes your next bill. These adjustments appear on vendor reports and are associated with the vendor.

Job costing reports on COGS appears incorrect in Inventory Assemblies.

The build transaction will have an adjusting Inventory – COGS transaction if you sell assembly items when you have an insufficient quantity on hand or when you later build assembly items with a cost different from the average cost, normally included in the invoice. Job costing and class reports cannot include the adjusting transactions as the build transaction does not enable you to enter either a customer: job name or a class.

It is important to prevent inventory quantities from falling into a negative status to keep accurate inventory records, including COGS. When there is an insufficient quantity on hand avoid selling assembly items. Make sure you enter the build transaction before the sales transaction to help ensure correct reporting if a sale is made when the QuickBooks records have not yet been updated with build information.

Please Note: Your cash basis balance sheet can be put as out of balance because of Negative Inventory.

Fixing negative inventory

  • Before attempting these solutions, keep the following in mind.
  • Without overwriting any previous backups, back up the QuickBooks company file. Also, keep these backups in a safe place.
  • To assure that these changes are legitimate, consult with your accounting professional. To adjust the current QOH to a positive value is not sufficient. Each occurrence of negative QOH must be eliminated.
  • A better option may be to start a new data file if there is extensive negative inventory that is not easily repaired
  • For an item, your first transactions are sales
  • If you have not established an average cost and your inventory reports are incorrect because of it then you can cause them to show the correct values by assuring that the earliest dated transaction for an item is a check, bill, credit card charge or Adjust Qty/VOH:
  • Choose Inventory from the QuickBooks Reports menu and then click on the Inventory Valuation Summary.
  • By double clicking the item name you can Quick Zoom an item showing incorrect values . By doing this you open the Inventory Valuation Detail report for the item. The transactions which are associated with these items are listed in order by date.
  • To open the Enter Bills window, Quick Zoom the first Bill listed.
  • On the detail report you opened in 2nd step, change the date on the bill to a date earlier than the first invoice listed.
  • To record the bill with the new date, click on Save & Close.
  • For each incorrect item, repeat Steps 2nd through 5th.
  • Without recording purchases, you have sold inventory items.

Bills may have been entered with accounts and not with inventory items. Edit the Bills and change the entries from the Expenses Tab to the Item if such a thing happens. Be aware, as this may alter your inventory expenses. Before undertaking this process, consult with your accounting professional.

  • Before entering sales, you have entered purchases or adjustments
  • Adjust the transaction dates such that bills are dated before invoices if you can do so legitimately:
  • Select Reports > Inventory > Inventory Valuation Detail in the menu bar.
  • Choose the Dates drop-down arrow and then click on all.
  • The report of an item showing a negative amount in the On Hand column, scroll through it.
  • Adjust the dates of the bills and/or invoices if you can do so legitimately so that the bill dates are before the invoice dates.
  • For each item with a negative amount in the On Hand column, repeat steps 2 through 4.

Know more on how to prevent negative inventory, call QuickBooks desktop support.

Are you a QuickBooks Desktop Pro user or a Premier user?

To know more on how to adjust your negative inventory in QuickBooks desktop, call on our QuickBooks desktop support number. You can also write to us at support@quickbooksupport.net. For more information visit-www.quickbooksupport.net.

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