Locations are normally physical locations, such as warehouses or branches. But locations can also be used for consignment stock.

When location tracking is enabled, all stock is considered to kept in a specific location. So when an inventoried item is purchased or sold, the stock location needs to be specified. Stock items can be transferred between locations using a Stock Transfer Journal.

When you turn on Location tracking, all your existing stock (if any) is assigned to the default location. The default location is a location with no code.