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Tips to fix Negative Inventory Problems in QuickBooks Desktop

Negative Inventory Issues

How Do I Correct Negative Inventory In QuickBooks?

In QuickBooks, the inventory count of an item that is less than zero is referred to as negative inventory. It serves as an indicator of a malfunctioning inventory management system, which typically occurs while trying to sell out-of-stock transactions or filling sales transactions before parallel buy transactions are filled. Unavoidable QuickBooks negative inventory problems necessitate prompt fixes to avoid loss. If you follow the steps to fix the negative inventory issues in QuickBooks Desktop, you might be able to avoid contacting QuickBooks POS Support. This page explains negative inventory, including its implications on your company file and potential reasons. It also describes how to resolve problems that result from negative inventory.

What is Negative Inventory in QuickBooks?

When you submit sales transactions ahead of the accompanying buy transactions, you end up with negative inventory because you are selling inventory items that you do not own.

When you sell items that you have entered into your company file?

  • Using the Items Tab, you can debit inventory and credit A/P, Cash, or Credit Card Payable when you make purchases using an item receipt, bill, check, or credit card charge.
  • You only sell goods that you have on hand when selling things that are listed on invoices or sales receipts.
  • Two transactions are recorded in the sales transaction:
    • The sales/receivable transaction debits accounts receivable and credits sales.
    • The COGS/Inventory transaction, which debits COGS and credits Inventory.
  • Because P&L and expense reports track income and expenses, they display invoices and sales receipts.
  • When you run B/S reports, they display item receipts, bills, credit card charges, and checks because they show inventory increases; when they display invoices and sales receipts, they record the inventory declines.

When you sell items that you have NOT entered into your company file?

  • The sales/receivable transaction is accurately recorded in the invoice.
  • QuickBooks makes the following assumptions about the average of the non-on-hand items for the Inventory/COGS transaction:
    • Either the item cost from the item list OR
    • The same average cost as the products you already own.
  • The assumed cost is used by QuickBooks to record the Inventory/COGS transaction.
  • The purchase transaction must record an adjustment to Inventory and COGS to account for any discrepancy if the subsequent purchase is not made at the estimated cost.
  • The cost is included in the P&L and other expense reports since it now impacts COGS.


  • You can view the Inventory/COGS transaction report by running the Transaction Journal report, even though it is never displayed on the transaction itself.
  • For a Cost of Goods Sold (COGS) account, bills, cheques, and credit card charges with Inventory/COGS changes it will show up on the Transaction Detail by Account and Account QuickReport.

How to view negative inventory in QuickBooks?

While negative inventory can be shown on your balance sheet, the following reports are where it usually appears:

Report on Inventory Valuation Details (IVD)

You can only assess the magnitude of your negative inventory via the IVD report. The Quantity on Hand (QOH) column displays negative numbers when there is negative inventory.

  • You have to go to the Reports menu
  • Then you have to select Inventory, and then you have to select Inventory Valuation

Report on Negative Item Listing

Using QuickBooks Enterprise 15.0 or later, the Negative Item Listing report is available. Take note that the past negative amounts are not displayed; just the current negative quantities are.

  • You have to go to the Reports menu.
  • After choosing Inventory, you have to choose Negative Item Listing.

You can use your Inventory Center if you are using QuickBooks Premier or Enterprise 2014 or older and don’t have Advanced Inventory.

  • Navigate to the Vendors menu.
  • Choose Inventory Center after choosing Inventory Activities.
  • Change the filter from Active Inventory to Assembly to QOH < = Zero in the Inventory Center windows that are in the upper left corner.

You may face problems in QuickBooks Negative Inventory

A new inventory item has no average cost

  • A new inventory item was produced by you; it had an item cost but no initial QOH or VOH.
  • As a result, the product lacks an average cost.
  • An invoice was used for the first transaction involving the item rather than a bill, cheque, credit card charge, or Adjusted Qty/Value On Hand (IAD).
  • The item enters negative inventory as a result of the sale.
  • The invoice uses the item cost from the item list instead of an average cost to credit inventories and debit COGS.
  • The price you pay for the item differs from the item’s cost.
  • The difference between the item cost and the actual purchase cost is adjusted for in the bill’s inventory and COGS, which is why it appears on the P&L report.

Your Quantity On Hand (QOH) has been negatively impacted by selling inventory that you do not own, and this might lead to an inaccurate Cost of Goods Sold (COGS) on your P&L report.

  • Without an item cost, a new inventory item is created.
  • Without making any inventory purchases, you sell that item.
  • QuickBooks must give an average cost of $0.00 since it lacks the data necessary to calculate the average cost.
  • Your inventories and COGS are distorted as a result.
  • Until you create an average cost with a bill, cheque, or credit card charge, or Adjust Qty/Value On Hand, they remain uncorrected.

Negative inventory causes errors in vendor reports

The invoice normally includes the Inventory/COGS transaction. Your next bill will include an adjusted merchandise/COGS transaction if you sell out-of-stock merchandise. These adjustments are connected to the vendor and show up in vendor reports.

Inventory Assemblies show incorrect COGS on job costing reports

When you create assembly items at a cost that is different from the average cost after selling assembly items when you don’t have enough inventory on hand, the build transaction will have an adjusting Inventory – COGS transaction, which is often included in the invoice. The adjusting transactions cannot be included in job costing and class reports since the build transaction does not allow you to specify a customer: job name or a class.

Preventing inventory amounts from going negative is important for maintaining accurate inventory records, including COGS. If there aren’t enough assembly items in stock, don’t sell them. To help ensure accurate reporting, make sure to submit the construction transaction before the sales transaction if a sale is made before the build information has been updated in the QuickBooks records.

Note: Your cash basis balance sheet may appear out of balance if you have negative inventory.

How to fix a negative inventory in QuickBooks?

Notes before attempting to use these fixes

  • Make a backup of the QuickBooks company file, being careful not to overwrite any earlier copies. Store these backups in a secure location.
  • To ensure that these changes are valid, speak with an accounting specialist. To bring the existing QOH to a positive number is insufficient. You have to get rid of every instance of negative QOH.
  • Starting again with a new data file might be a better alternative if there is a large amount of negative inventory that is difficult to fix.

Your first transaction(s) for an item are sales

You may make your inventory reports display the right values if they are inaccurate due to the lack of an average cost by ensuring that the earliest dated transaction for each item is a bill, check, credit card charge, or Adjust Qty/Value on Hand.

  • Choose Inventory from the QuickBooks Reports menu, then click Inventory Valuation Summary.
  • Double-clicking the item name will allow you to QuickZoom any item that is displaying inaccurate values. This brings up the item’s Inventory Valuation Detail report. The related transactions for this item are arranged by date.
  • To access the Enter Bills window, quickly zoom in on the first listed bill.
  • Modify the bill’s date so that it is earlier than the first invoice that appears on the detail report that you viewed in Step 2.
  • To record the bill with the new date, you have to click Save & Close.
  • For every wrong item, repeat Steps 2 through 5 once more.

You have sold inventory items without recording purchases

Instead of entering inventory items, you entered bills with accounts. If yes, then you have to edit the Bills. Transfer the entries to the Item from the Expenses Tab. Recognize that this could change the cost of your inventory. Consult with your accounting professional before undertaking this process.

You have entered purchases or adjustments before entering sales

  • Change the transaction dates so that bills are dated before invoices, if that is legally possible:
  • Choose Reports > Inventory > Inventory Valuation Detail from the menu bar.
  • After choosing the Dates drop-down arrow, you have to choose All.
  • Navigate through the report until you find an item where the On Hand column has a negative amount.
  • The dates of the bills and/or invoices should be changed such that the bill dates are earlier than the invoice dates if this is legally possible.
  • For every item in the On Hand column that has a negative amount, repeat steps 2 through 4 once more.

How to avoid having negative inventory in QuickBooks?

Avoid these issues by waiting to sell inventory products until after you have made the necessary purchases and recorded your transactions in QuickBooks.

Set up inventory items with an opening balance

  • After creating a new inventory item, you have to fill it up with the required data.
  • To find the average cost, you have to enter your QOH and Value at the bottom.
  • Before submitting a sale, you have to enter a purchase if you don’t currently have any units.

Use Sales Orders or Estimate to enter sales for which you do have inventory

  • You have to enter the customer order as a Sales Order.
  • Either enter the client order as a sales order (Edit > label Invoice as Pending) OR enter the customer order as an invoice and label it as pending.
  • After making the inventory purchases, record the transaction in your company’s data file.
  • Either convert the sales order to an invoice or select Edit > Mark Invoice as Final to make the invoice final.

Use Pending Invoices to enter sales for which you do have inventory

  • As an invoice, you have to enter the customer’s order.
  • Choose Edit from the menu bar, and then Mark Invoice As Pending.
  • Make the inventory purchases and record them in your company’s data file.
  • Choose Edit from the menu bar, and then click Mark Invoice As Final.
  • The date the items are shipped to the buyer should be updated on the invoice.


The above-mentioned article covers all the necessary steps related to Fixing negative inventory issues in QuickBooks Desktop. In case you still face any issues related to this topic then you can tell the help desk team. The help desk team is available around the clock for their users and without any hassle, you will be able to work on it.

Frequently Asked Questions

What is negative inventory?

An accounting term for a situation in which an item’s quantity in inventory is a negative number is “negative inventory.” When merchandise is returned and the quantity sold exceeds the quantity bought, this may occur.

What causes negative inventory?

All you do is sell more merchandise than you have. Not every purchase order that you made was entered into QuickBooks. Since you made a miscount in your physical inventory count, QuickBooks’ quantity is off. The quantity in QuickBooks didn’t match what you received from your vendor.

What will happen if the ending inventory is negative?

A negative inventory balance can also lead to major accounting problems and incorrect record-keeping. It is possible to have an excess of a product in stock. They might still be en route to your warehouse even in the event of a delay or a problem with the paperwork.

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