How does Quickbooks handle inventory? Quickbooks uses an average cost method to value inventory. This is different from the FIFO (First In, First Out) and LIFO (Last In, First Out) inventory methods.
There are three basic methods of inventory:
- LIFO Inventory Method
- FIFO Inventory Method
- Average Cost Inventory Method
Inventory Method Summary
This is also probably the single most confusing aspect of Quickbooks. In fact, many businesses choose not to track inventory at all in Quickbooks. However, using the Quickbooks inventory will greatly decrease accounting headaches when preparing financial statements for tax return purposes.