Inventory and Products Management Flashcards

Which QBO setting must be enabled before you can use inventory quantity tracking?

Answer: Track inventory quantity on hand in Products and Services settings

You must enable 'Track inventory quantity on hand' in Account and Settings under the Sales tab before using inventory features.

When you enter a bill for inventory items in QBO, which asset account is increased?

Answer: Inventory Asset

Receiving inventory via a bill increases the Inventory Asset account until the goods are sold.

In QBO, which document is converted to a Bill when ordered inventory items are received from a vendor?

Answer: Purchase Order

A Purchase Order in QBO is converted to a Bill once the ordered inventory is received from the vendor.

Which QBO report provides item-by-item detail of inventory cost, quantity changes, and ending value?

Answer: Inventory Valuation Detail

The Inventory Valuation Detail report shows every transaction that affected each inventory item's quantity and cost.

How does QBO's FIFO method apply when you purchase the same item at different prices over time?

Answer: It maintains separate cost layers and uses the oldest cost first when items are sold

FIFO in QBO tracks each purchase as a cost layer and applies the oldest layer's cost when recording a sale.

What does QBO do if you create an invoice for an inventory item when quantity on hand is zero?

Answer: The quantity goes negative, allowing the transaction to proceed

QBO allows inventory quantity to go negative, enabling you to invoice items you have not yet physically received.