If you've set up the QuickBooks Online integration for accounting with Costs Of Goods Sold (COGS), purchases will be mapped to an 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 what sending the Operations cost from a Done Manufacturing order (MO) allows you to do.
The feature is enabled in the QuickBooks Online integration setup dialog, when selecting Accounting with Cost of Goods Sold (COGS):
On the next screen, you can map liability accounts:
Once completed, the Done tab for Manufacturing orders will display the following option when selected 1 or more MOs:
Done manufacturing orders that are later changed
If a MO has been set to a Done status and then reverted or deleted, the accounting entry in QuickBooks Online will also be reversed to relate to the change.