How to fix negative inventory in QuickBooks
Negative inventory in QuickBooks is a common occurrence. But it can cause a lot of issues if it’s not addressed. Learn how to fix it and prevent negative stock in QuickBooks from happening.

Inventory assets refer to a business’s physical goods available to sell in QuickBooks Online. If you use QBO for your accounting and bookkeeping needs, you’ll want to know how to manage a QuickBooks inventory asset correctly.
Despite our best efforts, little accounting mistakes can slip in when managing inventory. QuickBooks gives manufacturers a tool that can help them track their finances and manage other areas of their business. This is why many manufacturers opt to use solutions such as QuickBooks for their accounting and inventory needs.
If you’re a manufacturer that uses QuickBooks for inventory management, you might have already stumbled across QuickBooks inventory assets and might be wondering what it is. This article will explain what is an inventory asset, and how you can set up and use them in QuickBooks Online.
Let’s go over some terminology used in relation to inventory assets in QuickBooks Online.
Inventory is simply the physical (or in some cases, digital) goods you have on hand, available for sale to customers.
Cost of goods sold (or COGS for short) is the cost of goods you’ve already sold to your customers. Your Gross Profit line shows the difference in the value of your Total COGS amount and Total Income amount.
Basically, inventory refers to the goods you haven’t sold yet, COGS is the cost of goods you’ve already sold.
Current assets are short-term assets that a company expects to sell (or otherwise use up, convert into cash, etc.) within a period of one year. Inventory assets are considered to be current assets.
In QuickBooks Online, inventory assets refer to the inventory items you have at hand and ready to sell. Let’s say that you’re a manufacturer that produces microphones. The number of microphones you currently have prepared and are ready to be sold would be considered inventory assets.
As inventory assets can be converted into cash through sales (in fact, that’s basically their purpose), they are considered current assets.
You can see the value of your current inventory assets on your balance sheet. You should find your inventory asset accounts under “Other Current Assets”. The value of an inventory asset account is the total value of the inventory assets you have on hand. Or in other words, if each of your microphones was worth 100 dollars, and you had five available at hand, the value of your inventory asset account would be 500 dollars.
There might be some confusion between the terms “inventory” and “inventory asset” as they are often used interchangeably. Both terms refer to the goods a business has available for sale. However, “QuickBooks inventory asset” can also refer to the value of the inventory items in QuickBooks, and how they are tracked in the accounting system.
You can set up QuickBooks Online inventory assets if you have QuickBooks Online Advanced or Plus. Here’s a step-by-step guide on how to do it:
After this is done, you will also want to continue setting up your product’s description, sales and purchasing info, and tax:
And you’re set! Just repeat the steps for your other inventory items to set them up.
Let’s quickly go over some of the common QuickBooks inventory asset account problems you might encounter, as well as how to fix them.
Double-check that the Income account used for the item has the account type “Other Current Asset”, as well as the detail type “Inventory”
Negative inventory can occur when you sell more products than you actually have available in your inventory.
You can usually fix negative inventory in QuickBooks by converting open purchase orders to bills. This tells QuickBooks that the items are on the way. It’s also a good idea to double-check your inventory, in this case, to see if you need to reorder anything.
You might get an incorrect value on your COGS account for a few different reasons. Double-check that you’ve entered the correct cost for your goods. If that doesn’t work, make sure you’ve linked the correct COGS account to your inventory item.
If you receive items in bulk, make sure they’re received and sold in the same quantity (for example, if you receive 1 kilogram of bananas, but you sell them as 1 pound).
You might find inaccuracies in your inventory reports if you have transactions in your inventory asset account that aren’t linked to any of your inventory items. It can also occur if you have inactive inventory items but still have a non-zero value.
You can run an inventory valuation report to help find any items that might be causing issues.
QuickBooks Online has some limitations when it comes to tracking stock levels in inventory. QuickBooks Online on its own does not come with features such as lot tracking and advanced inventory management. You can read more about the limitations of tracking stock in this article: QuickBooks serial number and lot tracking limitations.
You’ll want to integrate QuickBooks Online with the right manufacturing software for better functionality.
If you’re a manufacturer using QuickBooks for your accounting and bookkeeping needs, there’s some good news for you.
Katana cloud manufacturing software can be synced with QuickBooks Online. Features such as converting your raw materials into finished goods are only available in QuickBooks Desktop. By syncing your QuickBooks and Katana accounts, you can gain access to features such as:
If you aren’t convinced yet, you can try out Katana’s free 14-day trial before making a commitment.