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userbeveragesunlimit
April 5, 2022
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Inventory Shrinkage Chart of Account - defaults

  • April 5, 2022
  • 1 reply
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Today I changed the Inventory Shrinkage Chart of Accounts to an account type from 'Cost of Goods Sold' to 'Other Current Assets' as we do not want Inventory Shrinkage to be reflected on our Profit and Loss report.  I then noticed it created a New chart of accounts called 'Inventory Shrinkage - 1' with an account type of 'Cost of Goods Sold'.  I tried to inactivate it, but got a message of "You cannot delete this account as it is used as default for one of the sales lines."  How do I change the default so I can inactivate Inventory Shrinkage -1?

 

 

Best answer by BigRedConsulting

QuickBooks online sure is a piece of work!

 

I don't know why it does this. Seems overly rigid. Still, carrying lost inventory as an asset doesn't make sense to me: It's lost, so it's not worth anything.

 

I think inventory shrinkage should be an expense, and you should recognize it when you realize it's gone. That's rather standard, as I understand GAAP.

 

I suppose if you want to hide the fact that you're inventory is losing value you could create a Journal that decreases the Shrinkage account and puts the money somewhere else.

1 reply

BigRedConsulting
BigRedConsultingAnswer
April 5, 2022

QuickBooks online sure is a piece of work!

 

I don't know why it does this. Seems overly rigid. Still, carrying lost inventory as an asset doesn't make sense to me: It's lost, so it's not worth anything.

 

I think inventory shrinkage should be an expense, and you should recognize it when you realize it's gone. That's rather standard, as I understand GAAP.

 

I suppose if you want to hide the fact that you're inventory is losing value you could create a Journal that decreases the Shrinkage account and puts the money somewhere else.

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