Inventory account has negative balance

Question: The balance of my inventory account happens to be negative. Can you tell me why? Have I done anything wrong? I did error checking every time before closing the MYOB data file.

Answer: Unfortunately, yes you have done something wrong or inherited a problem. The general ledger balance of the inventory account (s) can only go into negative if:

  1. You are using the inventory feature to track stock and have linked the items incorrectly.
  2. You are using the inventory feature but have entered journal entries to the general ledger account (you should only use item sales & purchases and Inventory Adjustments to change the inventory account).
  3. You are using a manual stock system and have made incorrect journal entries to affect the general ledger balance.
  4. Your inventory account opening balance was wrong.
  5. You have coded inventory adjustments to the 1-XXXX Inventory account instead of the 5-XXXX inventory adjustment account.

Review the transactions that have gone through the inventory account to see where the offending entries are. You may need the help of your accountant or a certified consultant to help you fix this problem.


Lynley Averis

Lynley is an MYOB Certified Consultant & has been involved in training in New Zealand since 1985. She's written various accounting & MYOB workbooks including co-authoring “Bookkeeping for Dummies”. She has consulted on all versions of MYOB Accounting, Retail and Payroll over the past 18 years and has previously worked for MYOB. She currently consults to NZ businesses on all aspects of business systems - her mission for clients is for them to spend as little time as possible doing accounting!