This is a short article on what I’ve learned recently and I was thankful that a new client was able to show me what they were dealing with.
I was speaking with a new customer and they were telling me about some issues they have had with Fishbowl and QuickBooks in regards to their Inventory Reconciliation / Receiving Reconciliation.
The core problem is that, the Bills they have in QuickBooks debit Inventory Offset Account, instead of the Inventory Asset account; and that the Item Receipts are being deleted. I explained that the way Fishbowl works for QuickBooks Desktop enabled Accounting Systems is that when you receive in Fishbowl; it creates the QuickBooks Item Receipt, then when you reconcile it will create the QuickBooks Bill and delete the QuickBooks Item Receipt.
I think we both misunderstood each other, but hey its not like these systems are hard to test. Lets do it, so I put together a GoToMeeting and we got to work.
What we discovered was this.
The standard workflow for Fishbowl works (ok- depends on your Accounting Practices). But when you have QuickBooks Enhanced Inventory Receiving turned on, it begins to work differently.
With it on it works like this.
- Receive Inventory
- An Item Receipt is created to debit Inventory Asset AND credit to Inventory Offset a liability account.
- Reconcile Inventory
- The Item Receipt is deleted by Fishbowl.
- A bill is created in QuickBooks, but it Debits Inventory Offset and Credits Accounts Payable.
- There is no Adjustment to Inventory Asset. It is missing.
That is what the most surprising thing was. With QuickBooks Enhanced Receiving, it ignores how the Bill is created to debit the correct Asset Acccount, it follows its own rules.
Moving forward it looks like this customer will have to recreate the QuickBooks file with that option off; as of now you can turn it off.