When working with inventory you will often see QuickBooks describe inventory quantity using two different terms. Quantity on Hand and Quantity Available.
The terms are fairly straightforward, but settings can change the way QuickBooks calculates.
Do you really know what the number you are looking at means?
Quantity on hand means just that. If your QuickBooks company file ‘thinks’ you have twenty-five widgets in stock, that’s the quantity you have on hand.
Quantity Available though can be manipulated. The purpose of quantity available is to show the QuickBooks user more than just how much inventory is on hand. It shows what other transactions in the system may be affecting the amount that is truly available.
The screenshot above shows preference settings that affect quantity available amounts. Rock Castle Construction in the sample file has marked both of the options. When QuickBooks determines what should be shown as quantity available, it will take into account both sales orders and pending builds.
Sales orders are a non-posting transaction. They record the order of a customer that will be invoiced later. This may be because the customer wants a later ship date, it may be because there is insufficient quantity available to fulfill the order, or it could be a special order.
Whatever the reason, QuickBooks will subtract these amounts from the quantity on hand before displaying the quantity available.
A build in QuickBooks refers to the creation of Inventory Assembly type items. Assemblies are items that are made up of various components. Usually these components are other inventory items in the company file.
‘Making’ an assembly item is called a build. If there are insufficient quantities of any one component part, the build transaction cannot be completed. It can be set to Pending however.
That s the second option. Subtract pending builds from the quantity on hand before computing the quantity available.
So the formula would be Quantity on hand, less Quantity on sales orders, less quantities on pending builds. This would create the Quantity Available.