turn off inventory valuation?

 My inventory items are showing up with an average cost, but I did not put that in, nor do I want it.  I have 0.00 on cost, and I have 0.00 on sales price, yet it is still calculating an average cost and applying that to both item receipts and also to invoices within the Inventory Asset account.  How do I get it to not do this?  

 So here is my problem: My Cost of Goods account is completely skewed.  All the invoices of goods sold that have debited that account are off by thousands of dollars (an invoice for $9858 is showing as a debit of $1291.99) because of the way the inventory has average cost out. Every invoice must be taking the items and debiting COGS by much smaller amounts that should be.  Thus, my Cost of Goods account is WAY lower than it should be falsely inflating my Profit/Loss for the year by exponential amounts.  

 If you have an average cost and a zero in the cost block, then someone sometime recorded a purchase or a starting inventory value for that item

right click on the item and select quick report, set the date range on the report to ALL, you can double click on any transaction to bring it up and examine it.

From there you can figure what went wrong

 Hmm.  Not finding any changes made to affect average cost.  I just transfered my company file from QB Pro into Enterprise with Advanced Inv. and also Enhanced Inventory Receiving.  All my opening balance inventory numbers have a value of zero.  When I created my inventory items, I put cost as 0.  But it started automatically calculating the average cost as soon as I began to enter in invoices, POs, and item receipts.  

Every inventory adjustment made so far has had a total value change of 0.  If I try to enter and adjusment in right now, it will give it a value, but nothing is recorded so far, so running the report as you mentioned has not brought anything new to light.

Any other ideas?  

Did you have this problem in QBpro before you went to enterprise?

what year QB pro

Open QB pro and restore from back up and see.

 But it started automatically calculating the average cost as soon as I began to enter in invoices, POs, and item receipts.  

POs are non posting and do affect anything - rule them out

item receipts means you listed the item on the item tab, entered a qty and a value - that being true, there is the start of average cost.

enhanced receiving is not reversable, if it were me I would uninstall and reinstall enterprise and do not turn it on, many are having problems with it

Every inventory adjustment made so far has had a total value change of 0.  If I try to enter and adjusment in right now, it will give it a value, but nothing is recorded so far, so running the report as you mentioned has not brought anything new to light.

if an adjustment shows a value at the bottom right of the adjustment screen, and if you selected an adjusting account, when you save it does post that amount to the adjusting account

Please explain step by step what kind of adjustment and how you are doing it.

I hope you are not using inventory asset as the adjusting account, that would be completely wrong and will cause all kinds of problems, if you have been, then delete all those adjustments or edit them and use a different account.

Why are you doing adjustments?

In normal operations you only do adjustments for inventory taken out for business or personal use, and if there is theft/damage/spoilage etc - no other reason

Rustler, 

Thanks for helping me on this. 

Did you have this problem in QBpro before you went to enterprise?

No, but I didn't use any of the inventory tracking in QB Pro.  We used excel to track inventory while using Pro, then switched to Ent. at the beginning of the year and started our inventory tracking through that.  

what year QB pro

2009

POs are non posting and do affect anything - rule them out

I meant bills from POs.  

item receipts means you listed the item on the item tab, entered a qty and a value - that being true, there is the start of average cost.

But if I don't do item receipts, then how do I add in inventory once I actually receive it?  Item receipts are the only way.  With EIR, the Item receipt is separate from the bill and thus only has an item tab.  I have to record item receipts through the item tab - that's the only option.  

Enhanced receiving is not reversable, if it were me I would uninstall and reinstall enterprise and do not turn it on, many are having problems with it

I am willing to do this, however, Enhanced Inventory Receiving seemed to be the only solution to paying for items before receiving them.  Withouth EIR, the bill and item receipt are connected and I am unable to pay for the items before receiving them.  Our business always pays for all purchase orders (or rather the bills we create from the purchase orders) before we actually receive the inventory. Enhanced Inventory Receiving allows for the entering/payment of bills separate from the receiving of the items into inventory. 

If an adjustment shows a value at the bottom right of the adjustment screen, and if you selected an adjusting account, when you save it does post that amount to the adjusting account

My starting inventory numbers, adusting account Opening Balance Equity, did not show a value.  I actually did figure out a way to adjust the inventory without changing the value (by changing the adjustment type to Quantity and Value instead of just Quantity, then I can zero out the value).  

Now my problem is not the adjustments.  My problem is that my Cost of Goods Sold account has taken an the average cost and applied that instead of just applying the exact amount off my invoices.  (Every invoice entered increases my COGS account by the calculated average cost number instead of by the number on the invoice.  Eg my invoice totals $1629, but the COGS increases by $3203.)  Obviously, this is completely skewing my financial reports.  

I really need to eliminate the Inventory Asset and Inventory Offset accounts from my Bal. Sheet and fix the COGS problem as well.  

Does that make sense?  Thanks for your help, I appreciate it! 

  But if I don't do item receipts, then how do I add in inventory once I actually receive it?  Item receipts are the only way.  With EIR, the Item receipt is separate from the bill and thus only has an item tab.  I have to record item receipts through the item tab - that's the only option. 

By item receipt I mean that you receive inventory in QB, you can use enter inventory with bills, without bills, and you can bypass that completely, and use use write checks or enter credit card charges and list the items on the item tab - they all work on inventory the same. See this explanation of how to receive inventory items in QB

http://onsale-apparel.com/Rust...

Withouth EIR, the bill and item receipt are connected and I am unable to pay for the items before receiving them

Use write checks or enter credit card charges, use the expense tab, select accounts payable and select the vendor on the same line, enter the amount, that sets a credit with the vendor, when the bill comes in, receive the items, then use pay bills, top left click apply credits, then pay the balance.

 (Every invoice entered increases my COGS account by the calculated average cost number instead of by the number on the invoice.  Eg my invoice totals $1629, but the COGS increases by $3203.)  

No this is correct, cost of anything is not on the invoice, on the invoice is sales price and the should post to an income account.  If the average cost is higher than you are selling it for, that is a different situation and is usually traced to recording a purchase of a box of 4 as 1 (as an example).

You can run a quick report on the item, then double click on the bills transaction showing to see how the purchase was recorded. IF that kind of error happened just edit the transaction to show the correct qty and the original cost, QB will redo all average cost postings

You can not just juggle numbers and fix things, all you are doing is opening yourself to penalties in the event of an audit, and since nothing was really fixed the problem will crop up again.

You can not just eliminate accounts from the balance sheet or the P&L.

 So if I go to all the work of going back and restarting the company books at the beginning of the year without EIR turned on, will QB still try to create the Inventory Asset and Inventory Offset Accounts that it has created with EIR turned on?  Basically, is there a way I can track what inventory I have in stock without QB trying to value it?  I need to be able to value it myself with average costing it out, because the value of inventory changes every day.  

 I meant to say "I need to be able to value it myself without average costing it out..."

So I am realizing that the whole method of Cost of Goods Sold is a difficult method with my particular industry and product.   Basically, so far, here has been my way of keeping books.

Total Expense = Total Purchases from Vendors - Total Value of Current Inventory (where current inv. value is adjusted manually through a current asset account, so that does get reflected on the Bal. Sheet)

Profit = Sales - Total Expense

I guess I haven't really used COGS as it should be used, because I am not really calculating the cost of what I have sold, but rather the cost of what I have purchased.  I want my COG account to reflect all my purchases from my vendors as a raw expense account.   Maybe this is a bad way to do it, but it has worked for 2 years this way.  Now I just want to be able to keep track of my inventory through QB as well.  

 If you create a new file with EIR off, there is no offset account

QB does average cost, with the add on for inventory to enterprise in 2012 you can select FIFO. if you change to FIFO see this

http://onsale-apparel.com/Rustler/warning-fifo

If you want to do periodic inventory in QB, here is how

create an asset account called inven-purchase and post all purchases there

Periodically count what is on hand and value it, then do a journal entry
debit COGS [value of what is missing]
credit inven-purhcases [same amount]

Doing periodic inventory requires that you keep the value of the purchases off the books, an audit will require that you show exactly how you reached the value that you used for the journal entry.  And that system you use must be an IRS approved system: average cost, FIFO, LIFO, specific cost, LCM (which requires one of the other plus market valuations)

IF you do periodic inventory you can still use inventory items, BUT you must never record a purchase of the items in QB, and you must NEVER enter a cost in the item screen cost block or you will trigger a long standing bug, see this
http://onsale-apparel.com/Rustler/warning-inventory-bug

 the value of inventory changes every day.  

teh current market value of inventory has nothing to do with it, the value of what you have on hand does not change.  The value of inventory on hand is what you paid for it.

 Rustler, 

You said if I do periodic inventory, that I must never record a purchase of the items in QB.  At this point, there is no point for me to use this process if it is not going to help me keep track of my current inventory stock by tracking the inventory I buy (Purchase Orders) and the inventory I sell (Sales Orders/Invoices).  Are you saying that I can never enter a Purchase Order?

 POs are non posting so yes you can use them. And when they come in you can use enter bills, BUT you do not receive inventory items, you use the expense tab and select the inventory purchase account

In QB you can use inventory items but first you must insure that they do not have an average cost, that they do not have any value, and that the cost block on the item screen is zero or blank.

the point to periodic inventory is that you keep the qty and costs of each item outside QB so you do not deal with average costs, you use the specific costs of the items sold when you do the journal entry. But that requires additional work on your part, a choice you have to make

QB has limitations, you have no choice but to work within them.

I do not have enterprise but what I know about EIR, I see no reason for it, and I see problems cropping up in the forums because of it. As I pointed out in a previous post, you can book a deposit or prepayment without receiving inventory and without having EIR, I do it all the time.

 Charlie we will have to disagree on this one, unless you can point to some valid thing it does that I can't do in premier - except the preferences that are enterprise specific.

But the over riding point is that it is not implemented in a fool proof manner and it is causing problems, and it can not be revesed. When I reviewed 2012, though I couldn't review enterprise, I said then and nothing has changed since, if you can not reverse an option, don't use it.

CCRussell, what are the preferences you refer to that must be set properly to avoid the cost field being updated?  

 Oops - I meant to hit reply to post, but I accidently hit question solved.  Didn't mean to do that.  

Read about the cost/price update feature in Enterprise 12 in this article: http://www.sleeter.com/blog/2011/09/quickbooks-2012-automatic-cost-updates/

Make sure that you are upgraded to the latest release (R6 at this time) because earlier releases have bugs.

Rustler, no surprise that we don't agree on all points, do we ever???

Absolutely it is not fool proof, that we can agree on. See http://www.sleeter.com/blog/2012/01/quickbooks-enhanced-inventory-receiving/ and http://www.sleeter.com/blog/2012/01/quickbooks-enhanced-inventory-receivinginventory-offset-problem/ as examples.

Not being reversible - given the approach they took, I don't see a way around that. You have to be very, very sure you want to use a feature that you can't turn off.

What it can do that you can't do - well, certainly you don't HAVE to have this feature. You can work around the issues it addresses, however it creates a lot of work. If this worked (and that is the big IF here) by splitting receipts from bills you solve a number of issues. Such as what happens if you enter a receipt on one date and then bill the item on a later date. If you aren't careful, that changes the date of the receipt and that can cause problems. You can work around that, but it is a pain to deal with. EIR resolves that portion of the problem. Unfortunately, it creates as many problems as it resolves.