Negative inventory is one of the most common issues QuickBooks users face. It creates confusion in reports, throws off balances, and makes it hard to trust your numbers. The good news is that negative inventory is avoidable and fixable once you know what causes it. Why QuickBooks Shows Negative Inventory QuickBooks tracks inventory based on a perpetual system. Every time you buy, sell, or adjust stock, the system updates quantities on hand. Negative inventory happens when the system records more sales than available items. Here are the main triggers: Selling before recording purchases If you create an invoice or sales receipt before entering the bill or item receipt, QuickBooks thinks you sold stock you did not have. Incorrect item setup If items are not marked as inventory parts or if units of measure are wrong, sales can reduce stock that does not exist. Backdating transactions Entering a sales transaction dated earlier than the purchase causes the system to ...