How does Xero treat untracked items during the inventory process?

Xero treats untracked items by requiring manual tracking. In the context of inventory management within Xero, untracked items are those for which the software does not automatically keep an account of costs or quantities. Since these items are not monitored by the system, it falls upon the user to manage and record the relevant details such as purchase price, sales information, and quantities. This approach contrasts with tracked inventory items, which Xero automatically tracks and manages. As a result, users must engage in manual tracking for untracked items to ensure accuracy in financial and inventory reporting.

The other options involve features and functionalities that do not apply to untracked items. For instance, calculating an average cost typically pertains to tracked items that the system monitors. Automatic addition to inventory reports is relevant for items being tracked, as Xero compiles and reports data for those. Lastly, allowing for journal postings would not apply directly to untracked items in the context of inventory management, as it generally pertains to accounting entries rather than item tracking.