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Every inventory adjustment carries a reason — why the quantity changed. Each reason maps to an offset account so that posting an adjustment also posts a balanced journal entry. Map the reasons before your team posts its first adjustment.

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Open adjustment reasons

1

Navigate

  1. Open Settings → Inventory.
  2. Click Adjustment reasons.

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Seeded reasons

adorabl seeds a standard list for every organization:

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Map each reason to an account

1

Choose the offset account

For each reason, pick the Expense (or cost of goods sold) account that should absorb the adjustment. Most organizations map shrink reasons to a shrinkage or COGS account and Found to the same account so corrections net out.
2

Save

Click Save. The reason list is available immediately on the inventory transaction line grid.

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How adjustments post

Unit cost comes from the line cost you enter, or the item’s cost when the line is blank. Warehouse transfers move quantity between locations without a journal entry, because both sides use the same Inventory account.
An adjustment cannot post until its reason has an offset account and the line has a cost. Drafts save without either.

Inventory transactions

Record adjustments and transfers.

Item GL accounts

The inventory account adjustments post against.

Operations setup

Full inventory setup checklist.

Chart of accounts

Add an expense account for shrink if you do not have one.