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How can I adjust the inventory without creating negative value and loss?

For example, I have put in the system that product X has 5 quantity, but later I find out there are actually 6 of them. when I go to the product section and add 1 from the "update quantity" section, then it creates a loss in the system, brings the 1 item into virtual location and when I go to Inventory> Reporting> Locations and then filter on "inventory adjustment in location", I see the negative value. Why does this happen and how to prevent it? How should I update/adjust the stock levels without this problem?

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It's the way Odoo is designed.  The "double entry" concept says that inventory must be moved from one location to another, and the virtual locations represent stock going in or out.

If you are using the accounting module this will allow you to track the inventory loss or gain (either you have less stock than expected, which is a loss, or more which is a gain).  

The inventory enquiries have filters to hide these virtual locations so you shouldn't see them.

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Thanks a lot for your reply. Could you explain where in Odoo I should adjust/update the stock for a product?

Kind regards

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Virtual locations are not stock on hand. Only Physical locations = Internal Locations, are counted as stock. Odoo uses virtual locations for all movements in and out of physical locations.  

When you do a goods receipt from a Vendor, the Vendor location Procurement will get a negative qty.  When you ship to customers the Customer location get a positive qty.  

The location for Inventory Adjustment and Scrap have a setting for which account the value is posted in accounting when you post stock in our out of these locations.

You might read here about locations:

https://www.odoo.com/documentation/16.0/applications/inventory_and_mrp/inventory/warehouses_storage/inventory_management/warehouses_locations.html

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