When items are managed in Tidy the only way to change the stock level is through a Sale, Purchase Order, Credit or Adjustment. This will lead to changes in the nominated inventory account, that is selected in Tidy in the Xero setup, on the Balance Sheet in Xero.
In Tidy, the “unit cost” is calculated using the average cost method. This method assigns a cost to items based on the total cost of all items purchased divided by the total number of items purchased. It also means that your managed items are recorded as a current asset in Xero and shown as such on your balance sheet.
When items are managed, Tidy is using a perpetual inventory management system to track managed items. This means that every time a managed item is bought, sold or used, those details are tracked in Tidy, allowing you to see changes such as the unit cost over time.
Generally high value inventory items, in terms of cost or value to your business operations, should be managed items. All assembly items (materials, ingredients, parts and components that you use to manufacture final products or to provide a service) are set to be managed items in TidyStock.
With managed items you are perpetually updating your stock level as items are bought and sold, so you have more certainty that your stock levels are true and accurate compared to unmanaged items. With unmanaged items stock levels and unit cost could be accurate if there is no overwriting of stock levels or the unit cost. With managed items you cannot overwrite stock levels without a reason, and you cannot change the unit cost. Therefore, there is much more assurance that your stock levels are true and accurate when items are managed.