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Negative average cost debits Inventory Asset and credits COGS

After recording an invoice for an inventory item, the Inventory Asset account increases and the COGS account decreases.

Why this is happening

The inventory item has a negative Average Cost. A negative average cost can be created by changing the item's quantity or value on an Adjust Quantity/Value on Hand transaction.

Usually, QuickBooks will warn you by saying: Do you want to make the cost per item negative for X?

How to fix it
  1. Run the Inventory Valuation Summary report for All Dates.
  2. Scroll to the item in question and QuickZoom (double-click) on it.
  3. On the Inventory Valuation Detail report, find the transaction that makes the average cost negative. Look for an Inventory Adjustment as this is the likely cause.
  4. Edit the transaction so that the Average Cost is no longer negative.
KB ID# SLN43120
10/26/2016 8:14:41 AM
PPRDQSSWS404 9138 Pro 2017 ac8792