Actually, changing the Active Status from Y to N does nothing other than allow it to be excluded from a few reports.  However, IS Tech introduced several other Status values.  From the IN-B Help:
 
Allowable values are Y (Active), N (Inactive), O (Obsolete), D (Discontinued), and E (Engineering).  All activity and transaction types are allowed for Active and Inactive status but Inactive can be excluded from some reports.  Obsolete items are for historical reference only.  Once an item status is changed to Obsolete, it can not be bought, sold, made, or have any on-hand quantity without changing the status back to Active or Inactive.  Discontinued status is for items that can be consumed to deplete existing stock but should not be replenished.  Shipments and Issues to Work Order are allowed but purchases and creation of Work Orders to make more are not.  Engineering status is intended for items under Engineering development and not yet approved or released for general sale.  Orders and transactions are allowed for Engineering items but a warning will be presented indicating that the item is an Engineering item and still under review.