If you have a large number of items in inventory, it may be difficult to
count your inventory at the end of each month or quarter. A simpler approach is
to do cycle counts, counting a different set of items each week. Cycle counts
allow you to keep control over your inventory without sacrificing a weekend to
Before you start cycle counting, you may want to have your inventory
organized in areas,
shelves and/or bins. It can help to have a floor plan listing all shelves.
Make a copy of your floor plan and mark on it which areas or shelves will get
counted each week. Each area should be counted quarterly (4 times a year).
Note: If you store an item in multiple locations, count all locations
in the cycle count if you want to verify the inventory quantities in
Many companies use cycle counting to inventory their best-selling items and
more expensive items more frequently than other items. It may help to count
inventory at the same time each week, preferably when things are slow. It is
more difficult to count inventory while things are being taken out of
inventory. Also, you should avoid counting inventory while goods are being
received into QuickBooks. This may lead to inaccurate counts.
It can be helpful to have a freeze period before each cycle count that
Not shipping and/or receiving goods.
Making sure that all goods that have been received are put away.
Making sure that all shipments have been entered in QuickBooks before you
Prior to the inventory cycle count, record all damaged goods and all goods
returned to the vendor for repair or credit
(non-conforming material report).
This is a sample process for performing a weekly inventory cycle count. You
can use your own established process or modify this one to fit your business
Print a Physical
Inventory Worksheet and mark the area or shelf that will be counted.
Do this right before you count, not the day before or hour before. If too much time passes between when you print the report and when you count the inventory,
quantities might change, which could lead to an incorrect count.
Count the items and compare the quantity to what is listed on your Inventory
If the amount is off, investigate the error before making an
Look at the item in QuickBooks to make sure nothing has changed since
printing the Physical Inventory Worksheet. Go to the Lists menu, choose Item
List, find the item you are having a problem with, and then select it. Click
Reports at the bottom of the list and choose Quick Report. In the Date field, select This
Month. Review the report to make sure nothing has happened since starting the
Double-check that you counted the right item.
Count the item again. Check if there is more than one location for the
Ensure that adjustments for damaged goods and goods returned to vendor were
completed before the count.
After you have exhausted all possibilities for error,
make an adjustment.