If you've configured the QuickBooks Online integration for accounting with purchase orders sent as bills to an inventory asset, purchases will be mapped to the chosen inventory account in QuickBooks. For example, if you send a bill to QuickBooks from a purchase order (PO) that contains ingredients totalling $50, the inventory account balance in QuickBooks will also be $50.
Once you sell the completed product (with ingredients) and send the invoice to QuickBooks from the Katana sales order (SO), a journal entry will be created in QuickBooks. The inventory account will be credited $60 (the final cost of the product), thus ending with an inventory account balance of -$10.
To address the negative balance in the inventory account, we need to record a transaction in QuickBooks to increase the inventory account by the amount of the operations cost (while also crediting a liability account, e.g. "salaries payable"). This is why you can choose to send manufacturing operations cost in the QuickBooks configuration.
From the configuration area, you can check this option so that operation costs can be sent to QuickBooks.
Send operation costs
If you checked the option to send operation costs, you can go to the Done tab for manufacturing orders (MOs), select 1 or more MOs, and you'll see an option to send operation costs to QuickBooks.
Done MOs that are reverted or deleted
If an MO has been set to a Done status and then reverted or deleted, the accounting entry in QuickBooks Online will also be reversed to reflect the change.
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