where the data for quantity reduction and inventory update in the sales report and cost report are read from?

In QuickBooks Online (QBO), the data for quantity reduction and inventory updates in sales and cost reports are sourced from your inventory records, Richard. I am pleased to share some information.

When you make sales or purchase transactions, QBO automatically adjusts the inventory quantities based on these transactions. Purchasing an item increases the quantity of inventory you have. If you decide to sell, it can help boost your sales or income by generating revenue from the sale but it will decrease the inventory quantity.

On the other hand, the unit price in the report is indeed from the purchase transaction that helps calculate the cost of goods sold.

For quantity updates, QBO tracks the changes in inventory levels through sales and purchase transactions, as well as manual adjustments you make to the inventory quantities.

Moreover, you can run inventory reports to get a comprehensive overview of your item's status. You can also adjust inventory quantity on hand so you can manually adjust an item's quantity without recording a purchase or sale.

Additionally, you can take advantage of our QuickBooks Live Expert Assisted services anytime if you require further assistance organizing your entries for an accurate record of your transactions.

It's a great opportunity to chitchat with you about inventories. Never hesitate to return once you have further questions. We're here to help.