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:
- You are using the inventory feature to track stock and have linked the items incorrectly.
- 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).
- You are using a manual stock system and have made incorrect journal entries to affect the general ledger balance.
- Your inventory account opening balance was wrong.
- 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.