Inventory and Non inventory items

Hi, @Lh1202. It's great having you in the QuickBooks Community. 

Changing a non-inventory item to an inventory item will affect past transactions and financial reports due to how these item types are treated within the software. I'm here to share details about the effects and potential issue of changing item types in QuickBooks Desktop (QBDT).

While inventory items affect the Cost of Goods Sold (COGS), non-inventory items typically influence only the expense accounts when purchased. 

If you shift an item from a non-inventory to an inventory item, previous financial reports could be affected because the costs associated with the non-inventory items would now be reflected as inventory rather than as an expense. This change will alter your reported income and expenses for those periods. Similarly, all past transactions from the closed period associated with the non-inventory item will change the value of your inventory on hand since its historical cost will now be part of your inventory asset balance.

As such, one potential issue with changing a non-inventory to an inventory item type is that the switch may lead to changes in how you report taxable income. As inventory items can be capitalized and expensed as COGS, this shift could alter your tax liabilities or refunds, depending on whether the costs of goods sold increase or decrease.

For further guidance about this and in integrating with your third-party software successfully, I encourage collaborating with your accountant to help you change item types. 

If you need to get helpful insights on the status of your inventory, you can refer to this article in running reports to check your inventory status: Customize item reports. 

Let us know if you need further information about changing item types in QBDT. We're committed to offering ongoing support. Take care.