When would you use an Inventory Adjustment and which accounts are impacted in QuickBooks Online?

• A. To record a depreciation; it affects Fixed Assets.
• B. To adjust stock quantities; it affects Inventory Asset and COGS (or Inventory Adjustment) accounts.
• C. To record a vendor payment; it affects Accounts Payable.
• D. To transfer funds between bank accounts; it affects Cash.

Answer: (B)

Inventory adjustments are used to correct stock quantities that don’t match what QuickBooks Online has recorded. When you run an adjustment, you’re updating the Inventory Asset on your balance sheet to reflect the actual on-hand quantity. The offset to that change goes to either the Cost of Goods Sold (COGS) account or a dedicated Inventory Adjustment (variance) account, depending on how you set it up. This keeps inventory value and profitability accurate. For example, if you count more units than QuickBooks shows, you debit Inventory Asset and credit COGS (or the Inventory Adjustment account). If you count fewer units, you do the opposite. This isn’t used for depreciation, vendor payments, or transferring funds between bank accounts.