inventory

I'd be pleased to discuss with you about how FIFO or inventory works in QuickBooks Online, HMChong. 

QuickBooks Online uses the FIFO method. If we entered $0 cost, the system would calculate it as $0 COGS unless the quantity for the first units purchased (First In) will be zero. That's the time QuickBooks Online will use the cost of the second units purchased.

Make sure that the starting date of the FIFO is prior to the transaction dates. QuickBooks will depend on the start date you've selected when switching to FIFO, and those items used before the start date of the FIFO will fall under the Average costing.

When FIFO is enabled, any existing items are placed into one costing layer. Additionally, please know that the report only includes balances and transactions from the date of when FIFO began.

You can read through this article for additional information. It also provides an example of average costing and FIFO costing and the sample scenarios to help you understand the concept of FIFO.

• What is FIFO and how is it used for inventory cost accounting? 
• Average Costing vs FIFO: What's the best way to analyze inventory costs.

All you need to know about tracking your inventories in QBO can be found in this article:

• Set up and track your inventory in QuickBooks Online.
• Add inventory products in QuickBooks Online.

Should you have any other concerns regarding inventory, let me know and I'll help out again. 

@HMChong 

You need a 3rd party inventory management app to manage average cost.