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The Verify Update Option window is a caution window and must be read completely before responding to the prompt contained in the window.  The caution message will state that the update will reset each item to the state reflected on the report.  The state reflected on the report is the quantities shown in the Actual On Hand column.  The reconciliation report must be carefully audited before updating.  The prompt in the Verify Update Option window gives the operator the opportunity to change the beginning inventory date.  To change the date, enter "C" and reenter the date.  To update the reconciliation report, enter "YES", not "Y", must be entered in the Verify Update Option window.  If the update is to be aborted, press "F4" and respond "Y" to the Abort Update? prompt.  To complete the entire Physical Inventory process, a manual financial transaction must be entered in order to bring the General Ledger into balance with the physical inventory just counted and updated.  To accomplish this, generate a General Journal Entry on the GLE menu.  The reconciliation report will assist you in the generation of the Journal Entry.  Compare the Net BQOH Value to the balance of the inventory account prior to the start of the Physical Inventory process.  If the General Ledger balance is higher than the Net BQOH Value, the Journal Entry will contain a credit to inventory and a debit to whatever account is being used as an inventory adjustment account.  If the General Ledger balance is less, then reverse the debit and credit entries.

NOTE:  The General Ledger Inventory account is the current, or original, On Hand X Average Cost.  Add the resulting BQOH values for each item together and the resulting sum should be the General Ledger Inventory account.  Will this ever be the case?  NO!  Due to factors too numerous to count in this document, the G/L and the warehouse will very rarely agree.  This is why a Physical Inventory is recommended at least once a year.