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Chapter 15. Keeping Track of Your Invent... > Alternatives to the QuickBooks Inven...

Alternatives to the QuickBooks Inventory Feature

As mentioned earlier in this chapter, some inventory matters can’t be accomplished with QuickBooks. Manufacturers are encouraged to seek other methods of accounting for inventory. Furthermore, if you use a valuation method such as LIFO, FIFO, or Specific Identification, it is very difficult to account for inventory with QuickBooks.

Tip from

Although it is difficult, it is not impossible to track inventory in QuickBooks using a LIFO or FIFO method. You can choose to set up each differently priced set of inventory items as separate items, thus establishing what is known as tiers of inventory. For example, suppose you are in the business of silk-screening T-shirts and you purchase solid-colored T-shirts from a supplier. Your purchases include 1,000 T-shirts acquired at $3.29, 1,000 T-shirts at $3.33, and 1,000 T-shirts at $3.37. QuickBooks indicates that you own 3,000 T-shirts valued at $3.33 (the average cost). If you set up each block of T-shirts as a separate item with its own price, you can track each group of shirts individually and the cost is not averaged. Having to identify from which lot a shirt is chosen results in a lot more work on your part, but at least the accounting will be accurate.



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