Item Category selected in Bills

Hi Donna_L,

Sometimes negative inventory values pop up because of errors in tracking or data corruption and that means we might need to tweak a few things. I recommend chatting with your accountant to get the best advice on which account to use for your inventory. You can also reach out to our support team for some assistance - all the support options are right here. Plus, I've got an article for you that explains how to create items, just in case you need extra info. 

Cheers,

Princess

Hi Princess,

Thank you for responding. I don't have an accountant and I have reached out to MYOB support but have not had a response. I have set an asset account for Inventory. My question is when I create a supplier bill for items that are in my inventory what category should be selected and showing in the bill. Should the category be my Inventory account or should it be my cost of good sold account, Purchases? I have checked out your video on creating items and I have followed it to make sure my items are coded correctly, I think my negative inventory is happening due to errors in my Bills and Inventory Adjustments.

Hi Donna_L,

This can be a bit tricky since it involves accounting knowledge, but to give you an idea—when entering a supplier bill for inventory items in you should allocate it to your Inventory account, not the Cost of Goods Sold (COGS) or Purchases account. This makes sure your inventory value updates correctly when you receive new stock.
 

Here are some helpful guides you might find useful:
Managing linked categories
Entering bills

Regards,
Earl

Thanks Earl, I have one last question. I think where I have come unstuck is when I have created the supplier contact. In the create supplier screen, it asks for the "expense account" for all purchases for this supplier and the Inventory Asset account is not an expense account. So when I create a bill for a supplier the Purchases COGS account is already preselected as that is the "expense account" I assigned to the supplier. Should I go back in and change each Supplier contact to the Inventory account, even though it is an Asset account not an expense account?

Hi Donna_L,

You're right that the "expense account" field in the supplier setup is for an expense-type account, which is why it defaults to COGS when you create a bill. Since Inventory Asset is a balance sheet account (not an expense), it can't be used there.

If you're buying inventory items, it should automatically allocate them to the correct accounts based on the item setup. So rather than changing all your suppliers to the Inventory Asset account, I'd recommend just selecting the right account manually when entering a bill especially if you're using items linked to inventory.

If you still need help with this, reach out to our live chat support through our virtual assistant MOCA or submit a case via MyAccount.