If you are moving accounting systems, or just beginning to track your inventory after having been in operation, you may have inventory on hand before the Starting Date you selected during setup. You can account for this by using the Starting Value field.
This value will appear on your balance sheet, based on the starting date of the item, as both an Asset in the Inventory section and Opening Balance Equity in the Equity section.
Having opening balance equity is normal for operations with lots of initial inventory, and can be cleared with journal entries. Reach out to our support team, or your financial professional, for more detail.
When using initial quantities there are two things to consider:
Market Value vs Cost Basis: There are two common, generally accepted methods for accounting for inventory value - cost basis and market value. Either method is fine as long as you are consistent about using it in both your initial inventory and your ongoing entries.
For some operations, inventory valued at market rate is preferable because this is how they prepare their balance sheet for lenders. You can find a broader overview of market value balance sheets here [LINK]
For operations that purchase their inventory - cost basis accounting can be simpler because it just requires properly tagging expenses instead of researching current market rates.
Double counting existing inventory accounts: If you already had your inventory represented on the balance sheet before you began tracking quantities, there may be an existing inventory account already. If this is the case, you can zero that account by creating a journal entry that:
Credits (reduces) the existing inventory account
Debits (reduces) Opening Balance Equity
This will offset the impact of the initial quantity you made on the inventory item.
For more details about how to get started on inventory in the middle of the fiscal year, you can refer to this article.