· Reviewed by Nimra Khalid
What is inventory accounting?
Inventory accounting records goods bought for resale or production as an asset, then moves their cost to cost of goods sold when they are sold, written off or lost. It includes landed costs such as freight and duty, count and shrink adjustments, and a consistent cost method. The result is a true gross margin and an inventory balance lenders trust.
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Inventory accounting: what we do and how it runs
Inventory accounting records goods bought for resale or production as an asset, then moves their cost to cost of goods sold when they are sold, written off or lost. It includes landed costs such as freight and duty, count and shrink adjustments, and a consistent cost method. The result is a true gross margin and an inventory balance lenders trust.
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What it is
Inventory accounting records goods bought for resale or production as an asset, then moves their cost to cost of goods sold when they are sold, written off or lost. It includes landed costs such as freight and duty, count and shrink adjustments, and a consistent cost method. The result is a true gross margin and an inventory balance lenders trust.
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What you get
Purchases, landed cost, adjustments and COGS posted every month
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How it runs
Inventory ledger reconciled to your stock system and counts
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Discovery call
A 30-minute call about what you sell, where stock sits, which inventory system you use and how purchases are recorded today. We ask for a recent inventory valuation and the last P&L.
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A named accountant, a backup and a team lead
Inside your own software, on a fixed close calendar, with a reply from a person within 1 business day. Call +1-657-777-0006 or start a quote.
Get a custom quote 06 / 06
Who it is for
Ecommerce and retail sellers
You sell on Shopify, Amazon or in store, buy from overseas and have inventory in several places. Your P&L shows purchases as expenses and margin swings with each shipment.
Small manufacturers and assemblers
Raw materials become finished goods, and the books need to follow them. You want materials, labor and overhead in inventory until the product ships.
Product businesses raising finance
A lender or investor wants a balance sheet with inventory valued properly and a margin history that does not jump around. You need consistent inventory accounting before the conversation starts.
What's included
- Inventory accounting policy documented: cost method, capitalization rules, count cadence
- Purchase orders and supplier bills posted to inventory, not expense
- Freight, duty, insurance and brokerage capitalized as landed cost by shipment
- COGS recorded per sale, per channel or per period from your inventory system
- Cin7, DEAR, Katana, Shopify or Amazon inventory reports reconciled to the ledger monthly
- Physical and cycle count results posted as shrink or adjustment entries
- Obsolete, damaged and returned stock written down with an approval trail
- Assemblies and bills of materials costed for makers and manufacturers
- Inventory in transit and consignment stock tracked separately
- Inventory clearing and goods-received-not-invoiced accounts cleared monthly
- Gross margin reporting by product line, channel or location
- Year-end inventory valuation schedule for your CPA or accountant
Deliverables and KPIs
| Deliverable | KPI we report | Cadence |
|---|---|---|
| Inventory reconciliation | Ledger inventory agrees to inventory-system valuation each month, differences explained | Monthly |
| COGS posting | COGS recorded for every period and channel before the close | Monthly |
| Landed-cost schedule | Every inbound shipment costed with freight and duty allocated | Per shipment |
| Adjustment log | Every count, shrink and write-down entry approved and documented | Monthly |
| Gross margin report | Margin by product line or channel issued after Two-Tier Review | Monthly |
| Year-end valuation | Inventory schedule tied to counts and ready for your preparer | Annually |
KPIs are what we measure and report, agreed per engagement. Service-level commitments are set in your agreement.
How it works
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Discovery call
A 30-minute call about what you sell, where stock sits, which inventory system you use and how purchases are recorded today. We ask for a recent inventory valuation and the last P&L.
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Policy and mapping
We document the cost method, what counts as landed cost, how often you count and how adjustments are approved. Items and channels are mapped to inventory, COGS and clearing accounts in your ledger.
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Opening balance and first reconciliation
A named accountant ties the opening inventory balance to a count or valuation report, corrects purchases that were expensed, and reconciles the first month between inventory system and ledger.
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Monthly cycle
Each month: purchases and landed costs posted, COGS recorded, counts and write-downs adjusted, clearing accounts emptied and the margin report reviewed by the team lead before release.
Software we work in
How much does inventory accounting cost?
Inventory accounting is priced as a monthly add-on to bookkeeping, or as a standalone fee where you keep the rest of the books in-house. The fee reflects the number of SKUs, channels, locations and inbound shipments we process. Pricing depends on volume and scope, so we send a custom quote within 1 business day.
What moves the quote
- Number of SKUs, sales channels and stock locations
- Inbound shipments per month and whether landed cost must be allocated
- Whether you use an inventory system or need one recommended and connected
- Assemblies, manufacturing or consignment stock adding complexity
Market benchmarks
| Market | Typical range | Source |
|---|---|---|
| US | $150 to $1,600 per month for outsourced bookkeeping; product businesses sit toward the top | indinero, RadCity, NerdWallet (2026) |
| UK | £100 to £1,500 per month fixed fee | UK provider pricing surveys (2026) |
| Canada | C$300 to C$2,000 per month | Canadian bookkeeping fee surveys (2026) |
| Australia | A$300 to A$1,500 per month fixed | Australian bookkeeping fee surveys (2026) |
Third-party ranges for orientation, not our prices.
Get a custom quote No setup fee. Month-to-month.
Inventory accounting for your industry
Case study
14 months of payouts reconciled
Case studyReconciling 14 months of Shopify and Amazon payouts
An online retailer in the northeastern US sold through its own Shopify store and on Amazon. Deposits landed in the bank as lump sums net of fees, refunds, chargebacks and reserves, and the owner had been booking each deposit as sales. Fourteen months in, the books showed revenue that matched neither platform report, and the retailer's tax preparer would not work from them. The owner engaged LedgerBPO for payment-processor reconciliation, e-commerce accounting and catch-up bookkeeping. A named accountant, a backup and a team lead reconciled every payout for the 14 months back to the settlement reports and the bank, then put a monthly routine in place so the gap did not reopen. This ecommerce bookkeeping case study covers the first three months of payout reconciliation.
- Months of unreconciled payouts140
- Sales channelsShopify and Amazon, unreconciledShopify and Amazon, reconciled monthly
Security and compliance
- Read-only access to inventory and marketplace systems where roles allow it
- Read-only bank feeds where supported; we never move money
- MFA on every login, access logged per client, NDA per engagement
Full control list on the security page and country rules on the compliance page. Certifications are listed only when held.
Frequently asked questions
How much do inventory accounting services cost?
Pricing depends on volume and scope, and we send a custom quote within 1 business day. The main drivers are SKU count, channels and how many inbound shipments need landed-cost allocation each month. As a market reference, US outsourced bookkeeping runs $150 to $1,600 per month, with product businesses toward the top of that range (indinero, 2026).
Which cost method should I use?
Most small product businesses use weighted average or FIFO, and your inventory system usually decides which is practical. US tax rules and your CPA have a say, especially if you use LIFO. We apply the method your CPA approves consistently and document it; we do not choose it for you or give tax advice.
Do I need an inventory system, or can QuickBooks do it?
QuickBooks Online Plus and Xero track simple inventory at one location with average cost. Once you have multiple locations, bundles, assemblies or several sales channels, a system such as Cin7, DEAR or Katana keeps the units and the ledger keeps the dollars. We reconcile the two monthly and can help you choose and connect one.
What is landed cost and why does it matter?
Landed cost is the full cost of getting a product to your warehouse: the purchase price plus freight, duty, insurance and brokerage. If freight is expensed when the invoice arrives, margin looks high in months you sell and low in months you ship. Capitalizing it by shipment puts the cost with the sale.
How do you handle Amazon FBA and Shopify inventory?
Amazon and Shopify reports give units sold, returned and on hand by SKU. We use those, through A2X or Link My Books where you have them, to post COGS and reconcile units in FBA warehouses to the ledger. Our ecommerce accounting service covers payouts, fees and channel P&L alongside inventory.
How often should I count stock?
A full count at year-end at minimum, and cycle counts of fast-moving or high-value SKUs monthly if you can. Counts are the only way to find shrink, mispicks and receiving errors. We post the results as adjustments with an approval trail and show the trend so you can see where stock is leaking.
Can you fix inventory that has been expensed for years?
Yes, as a one-time project. We rebuild opening inventory from a count or valuation, reclassify purchases into inventory, compute COGS for the affected periods and produce a memo for your CPA on the effect. Our bookkeeping clean-up service handles the rebuild; this service keeps it right afterwards.
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