Inventory Tracking—how it works
Inventory Tracking is available as a Plus feature.
For any business that carries product inventory, the Inventory Tracking feature lets you manage and track orders with confidence. Know at any time which items are in inventory, how much of them you've sold and how much you have on hand. Rest easy knowing that all your financial statements are accurate because the Inventory data is automatically updated behind-the-scenes. Because QuickBooks Online uses standard inventory cost accounting rules, your inventory purchases are not treated as expenses, but are instead accurately reflected as Cost of Goods Sold (COGS). This helps you stay IRS–compliant when purchasing and selling items.
What is inventory cost accounting?
Inventory cost accounting is an accounting method based on the number of items you purchase, have in stock, and sell for a particular product. Inventory cost accounting helps you keep track of:
- The cost to you of the items you have sold (the cost of goods sold).
- The income you receive from the resale of inventory items.
- The current value of your inventory.
To determine the cost of items, QuickBooks Online uses the first in first out (FIFO) method, which is compliant with generally accepted accounting principles (GAAP) and accepted by the IRS.