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By default, Point of Sale creates an account in QuickBooks named POS Inventory Adjustments and may send transactions to this account when:

• An inventory item with a quantity and cost associated with it is manually created.
• An inventory item which has a quantity and cost associated with it is deleted.
• A cost adjustment memo is created.
• An item’s quantity has been changed in the Edit Item screen, or a quantity adjustment memo has been created manually.
• A cost or quantity adjustment memo is reversed.
• Changes to the physical inventory are made through the Point of Sale Physical Inventory process.

Typically, this is treated as a holding account, and the balances there are changed or removed through a General Journal Entry made by your accountant.

This is a very common call we receive. Usually the most common cause for this call is that the balances cannot be tracked back easily.

It can take some digging, but these can actually be linked back, but not as you would typically expect. You have to look at the date of the transaction in the detail in QuickBooks. Then go into the QuickBooks Point of Sale program, and look for an adjustment on the same date, using the Quantity Adjustment History under Inventory on the top menu.

What we usually find is that people are directly editing the Qty on Hand in the items list, instead of doing a Qty Adjustment Memo, or a Physical Inventory. In some cases, it can be even harder to trace, as the adjustment in QuickBooks may be a cumulative adjustment based on several items quantities being edited in a single day.

When it comes to adjusting the amount out, you really need to work with your accountant to determine where the amounts will be adjusted to. They are going to be your best source of advice in this situation.