When you add or reduce inventory quantities, WorkingPoint needs to keep track of those changes to accurately determine the value of your inventory and the cost of goods sold. In addition, your Income Statement, Balance Sheet and Schedule C reports are affected by inventory adjustments.
There are a couple of ways you can account for inventory adjustments:
You can create an expense account for inventory reductions and an income account for inventory additions.
You can use the cost of goods sold account to track all the adjustments you make in the on-hand quantities of your inventory items (both additions and reductions).
Check with your accountant to see what would work best for you.
How do I take a physical inventory of my products?
What is COS?
What is the difference between an Inventory Asset account and a COS account?