What is a characteristic of untracked inventory in Xero?

Untracked inventory in Xero is characterized by its inability to monitor or record the quantity or value of items on hand. This means that businesses do not have an active system in place to manage stock levels for these items within Xero's accounting platform.

As a result, when dealing with untracked inventory, companies are acknowledging that while they may sell or purchase these items, they won't be tracking their quantities or costs in the inventory system. This approach is often used for less valuable items or where the volume of transactions does not necessitate detailed tracking.

In contrast, tracked inventory would involve calculations regarding quantity on hand, posting journals to the cost of goods sold account, and automatic adjustments to inventory values—all of which are not features of untracked inventory.