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Xero Practice Exercise Set
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© 2018 Elefant, LLC
It’s tough to believe that it has been over a year since we launched this little project.
In that time, we have heard from many bookkeepers and accountants who have used
this book to dive into Xero and become experts. We are so pleased because our
passion has always been to teach and share our knowledge with others, which is how
our company came to be.
At the end of 2016 after two years of planning and design, we launched our company
to help other accountants and bookkeepers build the practices of their dreams,
leveraging technology like Xero. And we’re proud of the way it’s turned out – the
company is bigger and better than our original vision, which is a result of our
commitment to try and try again. Like these practice exercises.
What started out as a way to help our webinar attendees gain more experience after
our courses, something for them to practice with in their own time, has turned into, in
essence, a book. It’s a jam-packed, detailed and precise catalog of real-life experience in
a step-by-step format.
As we have grown and improved over the last year, so has Xero. This updated
version reflects new releases and features since the beginning of 2017.
In the summer of 1997, Monica and I drove from Lafayette, Louisiana to Denver,
Colorado where I was starting graduate school. Back then, people used paper maps
to get around, so we had our Rand McNally Road Atlas with us. It was from 1993 and
the cover touted that there had been over 25,000 updates from 1992, the year before.
Monica looked at me and said, “Then how many (expletive) roads have changed in the
last FOUR years?”
I promise there aren’t that many changes to this Practice Exercise Set, but there are
some important and fun updates. We encourage you to work through each of more
than 100 pages and not to get discouraged or overwhelmed.
Just take it one bite at a time.
Sincerely,
Amanda
Xero Practice Exercise Set Table of Contents
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PRACTICE EXERCISE #1: CHANGING THE COMPANY INFORMATION ............... 13
PRACTICE EXERCISE #2: ADDING OR MODIFYING GENERAL LEDGER
ACCOUNTS ............................................................................................................................ 15
PRACTICE EXERCISE #3: ADDING A BANK ACCOUNT OR CREDIT CARD
ACCOUNT .............................................................................................................................. 17
PRACTICE EXERCISE #4: EDITING GENERAL LEDGER ACCOUNT NAMES ....... 19
PRACTICE EXERCISE #5: ENTERING CONVERSION BALANCES ........................... 23
PRACTICE EXERCISE #6: EDITING DEFAULT PAYMENT TERMS .......................... 27
PRACTICE EXERCISE #7: EDITING EMAIL SETTINGS .............................................. 29
PRACTICE EXERCISE #8: UPDATING FINANCIAL SETTINGS ................................. 30
PRACTICE EXERCISE #9: IMPORTING CONTACTS .................................................... 32
PRACTICE EXERCISE #10: MERGING CONTACTS ....................................................... 34
PRACTICE EXERCISE #11: PREPARING INVENTORY FILE FOR IMPORT ............. 37
PRACTICE EXERCISE #12: IMPORTING INVENTORY ................................................ 38
PRACTICE EXERCISE #13: UPDATING INVENTORY BALANCES ............................. 40
PRACTICE EXERCISE #14: ADDING NEW INVENTORY ITEMS ............................... 43
PRACTICE EXERCISE #15: ADDING A DESCRIPTION-ONLY INVENTORY ITEM 44
PRACTICE EXERCISE #16: ADJUSTING INVENTORY QUANTITY ON HAND ....... 46
PRACTICE EXERCISE #17: IMPORTING SALES INVOICES ........................................ 49
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PRACTICE EXERCISE #18: CREATING A SALES INVOICE ......................................... 52
PRACTICE EXERCISE #19: CREATING A NEW REPEATING INVOICE ................... 54
PRACTICE EXERCISE #20: VIEWING INVOICE STATUS AND HISTORY ................ 58
PRACTICE EXERCISE #21: VOIDING AN INVOICE ...................................................... 64
PRACTICE EXERCISE #22: EDITING AN INVOICE ...................................................... 65
PRACTICE EXERCISE #23: CREATING A QUOTE......................................................... 67
PRACTICE EXERCISE #24: CONVERTING A QUOTE TO AN INVOICE ................... 71
PRACTICE EXERCISE #25: ISSUING A CUSTOMER CREDIT ..................................... 74
PRACTICE EXERCISE #26: CREATING A BILL .............................................................. 78
PRACTICE EXERCISE #27: PRINTING CHECKS ........................................................... 80
PRACTICE EXERCISE #28: CREATING A PURCHASE ORDER WITH NEW
INVENTORY ITEM .............................................................................................................. 82
PRACTICE EXERCISE #29: CONVERTING A PURCHASE ORDER TO A BILL AND
TRACKING INVENTORY CHANGES ............................................................................... 88
PRACTICE EXERCISE #30: EDITING A PURCHASE ORDER, CONVERTING TO A
BILL, TRACKING INVENTORY CHANGES..................................................................... 90
PRACTICE EXERCISE #31: IMPORTING BANK ACTIVITY .......................................... 92
PRACTICE EXERCISE #32: RECONCILING DRAWS AS SPEND MONEY
TRANSACTIONS ................................................................................................................... 96
PRACTICE EXERCISE #33: RECONCILING CREDIT CARD PAYMENTS ................. 98
PRACTICE EXERCISE #34: USING THE DISCUSS TAB ................................................ 99
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PRACTICE EXERCISE #35: CREATING BANK RULES ................................................ 100
PRACTICE EXERCISE #36: CASH CODING................................................................... 102
PRACTICE EXERCISE #37: CASH CODING WITH BANK RULES ............................. 106
PRACTICE EXERCISE #38: RECONCILING DEPOSITS AS RECEIVE MONEY
TRANSACTIONS ................................................................................................................. 107
PRACTICE EXERCISE #39: MATCHING DEPOSITS WITH MULTIPLE INVOICES
............................................................................................................................................... 108
PRACTICE EXERCISE #40: MATCHING DRAWS WITH MULTIPLE BILLS ............. 110
PRACTICE EXERCISE #41: RECONCILING DIFFERENCES BETWEEN
TRANSACTIONS AND BILLS ............................................................................................ 111
PRACTICE EXERCISE #42: CREATE DEPOSITS FOR MORE THAN ONE
REVENUE TYPE .................................................................................................................. 114
PRACTICE EXERCISE #43: OVERPAYMENT FROM CUSTOMERS ........................... 117
PRACTICE EXERCISE #44: REFUNDING OVERPAYMENTS FROM CUSTOMERS
............................................................................................................................................... 122
PRACTICE EXERCISE #45: PARTIAL PAYMENTS ON INVOICES ............................ 127
PRACTICE EXERCISE #46: USING THE ACCOUNT WATCHLIST ........................... 129
PRACTICE EXERCISE #47: PUTTING IT ALL TOGETHER ....................................... 130
PRACTICE EXERCISE #48: RECONCILIATION REPORT ........................................... 131
PRACTICE EXERCISE #49: FIXING ERRORS AT MONTH-END .............................. 132
PRACTICE EXERCISE #50: ENTERING A NEW BUDGET ......................................... 137
PRACTICE EXERCISE #51: RUNNING A COMPARATIVE BALANCE SHEET ........ 139
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PRACTICE EXERCISE #52: EDITING THE BODY OF A BALANCE SHEET ........... 140
PRACTICE EXERCISE #53: PUBLISHING A REPORT .................................................. 141
PRACTICE EXERCISE #54: ADDING COLUMNS TO THE INCOME STATEMENT
............................................................................................................................................... 143
PRACTICE EXERCISE #55: ADDING ROW GROUPS TO THE INCOME
STATEMENT ....................................................................................................................... 145
PRACTICE EXERCISE #56: USING CUSTOM REPORTS ............................................. 147
PRACTICE EXERCISE #57: ADDING REPORTS TO FAVORITES MENU ................ 149
PRACTICE EXERCISE #58: RUNNING AN AGED PAYABLES DETAIL REPORT ... 151
PRACTICE EXERCISE #59: INVENTORY REPORTING ............................................. 154
PRACTICE EXERCISE #60: USING BUSINESS PERFORMANCE TILES ON THE
DASHBOARD ....................................................................................................................... 157
PRACTICE EXERCISE #61: MANUAL JOURNAL ENTRIES ....................................... 159
PRACTICE EXERCISE #62: ARCHIVING GENERAL LEDGER ACCOUNTS ........... 162
PRACTICE EXERCISE #63: FIND & RECODE .............................................................. 163
PRACTICE EXERCISE #64: UNDERSTANDING THE ASSURANCE DASHBOARD 169
PRACTICE EXERCISE #65: VIEWING HISTORY & NOTES ACTIVITY ................... 170
PRACTICE EXERCISE #66: ADDING TRACKING CATEGORIES .............................. 172
PRACTICE EXERCISE #67: RECODING TRANSACTIONS FOR LOCATION .......... 174
PRACTICE EXERCISE #68: RECODING UNASSIGNED REVENUE TO LOCATION
............................................................................................................................................... 177
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PRACTICE EXERCISE #69: CREATE AN INCOME STATEMENT WITH TRACKING
COLUMNS ............................................................................................................................ 178
PRACTICE EXERCISE #70: IDENTIFY UNASSIGNED TRANSACTIONS ................. 181
Xero Practice Exercise Set Introduction
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© 2018 Elefant, LLC
Fast Fido’s Dog Walking Company
Fast Fido’s is a dog walking company. It is organized as a sole proprietor with a
start date in some unknown prior year. Fast Fido’s converted to Xero on their
own at some point during 2018 with beginning balances from their December
31, 2017 year end.
Fast Fido’s provides a dog walking service to individuals, as well as businesses
such as senior living centers that offer the service to their residents. In addition
to their services, they also provide a few branded items for resale to their
customers. They carry a limited inventory of leashes, collars, and clothing, so
their annual revenue does include a small percentage of retail sales.
Some information from 2018 has already been added to the organization,
however some information still needs to be added and updated. Your client has
attempted their own setup and has asked you to “fine tune” their Xero
organization and help them to get caught up with their activity.
Their beginning balances show a credit card balance at the beginning of 2018.
The credit card account was paid and closed by the end of 2018. Credit card
activity will need to be imported from the file provided. All of the 2018
transactions will need to be coded and reconciled.
A new checking account was started in 2018. Bank activity for the new checking
account will need to be imported from the client’s file provided. All of the 2018
transactions will need to be coded and reconciled.
Sales invoices for 2018 will need to be imported into Xero. The client has
provided an excel file with the data. They would also like their contacts
imported into Xero from an excel file.
They write a few checks manually but most of their activity is charged to a credit
card or a debit card directly to their account. For 2018 there was no payroll or
compensation to be recorded.
We will assume the information in the Demo Company for the current year
(provided by Xero) is correct. Any information for 2018 and the organizational
details is your client’s attempt to set themselves up on their own in Xero.
Xero Practice Exercise Set Introduction
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© 2018 Elefant, LLC
We may at times use information provided by Xero in the Demo Company. At
other times, we will use client provided information, which is included in these
exercises as upload files.
Since this is a Demo Company provided by Xero, you can go through
these practice exercises as many times as you like. Simply reset your
Demo Company and start over. (See the section on Demo Company to
follow.)
Disclaimer
This practice was designed to provide real life exercises an accountant or
bookkeeper would encounter in their practice using Xero as their accounting
software. Since Xero is a true cloud-based software, it is regularly and frequently
updated. There were over 1,000 releases in 2017 alone! Since users can access
Xero from any browser, they will always be working in the most current version
of the software. As such, some screens may look slightly different if an update
has occurred since the writing of this book.
These exercises are not meant to teach bookkeeping or accounting theory or
principles. We assume each user of these exercises has previously obtained the
required knowledge through their education or experience. Our goal is to
provide a framework to practice using Xero in a more detailed test environment
than the sample data already presented by Xero in their Demo Company.
Additionally, this fictitious company is representative of our experience of a
small business owner, operating their company on a cash basis. The transactions
do not represent any tax consequences or issues, nor does this organization
follow GAAP. Likewise, issues of unearned revenues, matching principles for
revenues and expenses, and depreciation of fixed assets among other GAAP
issues are not addressed.
Demo Company
Xero Practice Exercise Set Introduction
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© 2018 Elefant, LLC
These Xero practice exercises are to be used in conjunction with the Xero
Demo Company (US). Xero already provides relevant data in their Demo
Company using current dates. Our exercises help to expand the scenarios,
therefore extending the practice available. Every user has access to the Demo
Company at any time.
Sign on to Xero at www.xero.com. Access the Demo Company by clicking the
bullet list at the top left, then click My Xero. Xero will display the organizations
where access have been granted to you. Click Try the Demo Company at the
bottom of the screen.
You can reset the Demo Company at any time yourself. This is helpful if you
would like to start over with your practice.
To reset the Demo Company:
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1. Go to the My Xero navigation menu.
2. Click Reset at the bottom of the screen.
You will return to the Demo Company dashboard with the default information.
Exercise Order
These exercises, for the most part, have been designed in a certain order and
build upon each other, therefore you should start at the beginning and not skip
any exercises.
The exercise title is noted in bold so you understand exactly what you will be
practicing.
Practice Exercise: Change the company information
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Elefant Wisdom
We have added certain pieces of information we think would be helpful during
your exercises and correspond with our course demonstration. You will see this
information highlighted in a box.
Look here for “Elefant wisdom.”
Screen within Xero
To make sure you are in the correct screen, the first step of each exercise will
show the navigation from the Dashboard.
1. Settings > General Settings > Chart of Accounts
Our steps are outlined thoroughly with screen shots where applicable. We have
also highlighted or noted these steps using arrows and circles where necessary.
Trademarks
“Xero” and all other Xero references including “Beautiful Accounting
Software” are trademarks or registered trademarks of Xero Limited. Microsoft
Windows, Word, Excel are all trademarks or registered trademarks of Microsoft.
“Elefant” and “Elefant Wisdom” are trademarks of Elefant, LLC. All other
brands or products are trademarks or registered trademarks of their respective
holders and should be treated as such.
Limited Use
This version of Elefant’s Xero Practice Exercise Set was modified specifically
for use by Elefant, LLC internally. All other uses are strictly prohibited.
Xero Practice Exercise Set Introduction
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© 2018 Elefant, LLC
Comments
Please direct comments or suggestions for future versions to
[email protected] or visit www.elefanttraining.com
Xero Practice Exercise Set Settings
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© 2018 Elefant, LLC
Editing the Organization
You must first change the name of the Demo Company to reflect the company name,
Fast Fido’s Dog Walking Service.
Practice Exercise #1: Changing the company information
1. Settings > General Settings > Organization Settings
2. Enter the new company name- “Fast Fido’s Dog Walking Service”- in the Display name field and the Legal/Trading name field.
3. Click Upload logo. Browse to your logo file on your computer and select
Fast Fido’s Orig Logo, click Open and Upload. The logo will appear.
4. In the What is your line of business? field, begin typing “Dog Walking” and Xero will auto filter to “Dog Walking & Dog Day Care.”
5. Select “Sole Proprietor” as the Organization Type.
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6. Use the Quick find field under Postal address to enter the company
address. Enter “1220 Annunciation St.” and Xero will autofill all of the
relevant contact fields to “1220 Annunciation St., New Orleans, LA 70130.”
7. Under Physical address check Same as postal address.
8. Enter a fictitious email address.
9. Click +Add contact field to include a social media address (Facebook or
Twitter) for Fast Fido’s.
10. Save your changes.
11. Refresh your browser to see “Fast Fido’s Dog Walking Service” appear at the top of your screen.
The Xero Advisor directory geotags advisors’ markets by use of the Quick Find field. It is important to use the Quick Find feature, rather that typing the
address in the relevant fields.
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Editing the Chart of Accounts
Your client provides you with a copy of their previous system’s chart of accounts.
You notice some accounts need to be added. The client started with the default Chart
of Accounts provided by Xero, but a few general ledger accounts need to be added or
modified.
Practice Exercise #2: Adding or modifying general ledger accounts
1. Settings > General Settings > Chart of Accounts
2. Click +Add Account in the menu
3. Create a new account with these details:
a. Account Type = “Current Asset”
b. Account Code = “105”
c. Name = “Deposits in Transit”
d. Description = “Deposits in Transit”
e. Tax = Tax Exempt (0%)
f. Choose Show on Dashboard Watchlist
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© 2018 Elefant, LLC
4. Using the same method as above, add a new Expense account with Code =
“650” and the Name and Description = “Website and Domain Expenses.” Use Tax Exempt (0%) tax rate as the default rate.
5. Using the same method as above, add a new Revenue account with Code = “401” and the Name and Description = “Pet Accessory Revenue.” Use the Tax on Sales (9.25%) tax rate as the default rate.
6. Once your three new accounts have been added, review the All Accounts
listing. Notice the accounts represented by a padlock icon. These accounts cannot be deleted or archived, nor can you make journal entries to them. They are locked by Xero.
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Practice Exercise #3: Adding a bank account or credit card account
1. Settings > General Settings > Chart of Accounts
2. Click +Add Bank Account button at the top of the page.
Accounts not marked with a padlock can be deleted or archived by clicking the box to highlight the account and selecting either Delete or Archive.
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3. In the Search for your bank field, type “Sunny Bank.” Xero will first search
for the bank to see if a bank feed exists. Since this is a fictitious bank, there
will be no option to add a bank feed for this choice.
4. Click the Add it anyway link.
5. Enter the specifications for the credit card account being added as it will appear in Xero:
a. Account Name = “Sunny Bank Credit Card”
b. Account Code = “225”
c. Account Type = click the drop-down arrow and choose “Credit Card”
d. After you choose the account type, an additional field will appear to enter account numbers. Use the ending numbers “9996”
e. Click Save.
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Add either a credit card feed or a bank feed with the same step. If your bank is found during the search, Xero will prompt you to enter the online credentials to set up the bank feed at this point.
Practice Exercise #4: Editing general ledger account names
1. Settings > General Settings > Chart of Accounts
2. Edit account 400.
a. Click on the account name and change Name “Sales” to read “Dog Walking Revenue.”
b. Change Description to “Revenue from Dog Walking.”
c. Change the Tax Default to Tax Exempt.
d. Click Save.
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3. Edit account 500.
a. Click on the account name and change Name “Cost of Goods Sold” to read “COGS- Pet Walking Supplies.”
b. Change Description to “COGS- Pet Walking Supplies”
c. Change the Tax Default to Tax Exempt.
d. Click Save.
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4. Edit account 091.
a. Add “National Bank (US)” for the bank name.
b. Click on the account name and change Name “Savings Account” to read “New Checking Account.”
c. Click Save.
Conversion Balances
Your client provides you a copy of the balance sheet and bank statements from
December 31, 2017. Since the client attempted their own set up during the year, you
decide to check the conversion balances against the balance sheet from the previous
year-end and notice changes that need to be made.
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The balance sheet shows a balance of $4,130.98 for the Business Checking account;
however, the paper or PDF bank statement shows a balance of $4,038.98 for the same
reporting period.
You have traced the $100 difference to a payment from their customer City
Limousines. Your client did deposit the payment before the conversion date;
however, the bank account does not yet show the deposit.
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Additionally, the credit card account beginning balance has not been added, and
neither has the office equipment and related accumulated depreciation accounts.
These conversion balances need to be corrected or updated.
Practice Exercise #5: Entering conversion balances
1. Settings > General Settings > Conversion Balances
2. Click the Conversion Date button and select January 2018. This will make the
conversion date December 31, 2017.
3. Click Save.
4. Edit the checking account balance to reflect the actual bank balance of a debit
of $4,030.98.
5. Add an amount for Deposits in Transit.
a. Click Add a new line add an additional row to the grid.
b. Pull down and select the Deposits in Transit account.
c. Enter $100 in the debit column.
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6. Add Office Equipment.
a. Click Add a new line to add an additional row to the grid.
b. Pull down to select the Office Equipment account.
c. Enter the correct balance from the balance sheet in the debit column.
7. Add Accumulated Depreciation.
a. Click Add a new line to add an additional row to the grid.
b. Pull down to select the Less Accumulated Depreciation on Office
Equipment account.
c. Enter the correct balance in the credit column.
8. Add the Sunny Bank Credit Card.
a. Click Add a new line add an additional row to the grid.
b. Pull down and select the Sunny Bank Credit Card account.
c. Enter $2,500 in the credit column.
9. Add the Retained Earnings balance.
a. Click Add a new line add an additional row to the grid.
b. Pull down and select the Retained Earnings account.
c. Enter the correct balance in the credit column.
10. Click Save.
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You can enter your conversion balances at any time, partially or in full.
You can lock balances to prevent your client from posting in
previous periods.
Invoice Settings
Your client has asked you to customize the standard sales invoice in Xero. They had a
new logo created and would like their invoice to reflect the new logo, and to establish
default due dates for bills and invoices.
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Practice Exercise #7: Editing invoice logo
1. Settings > General Settings > Invoice Settings
2. Find the existing Standard branding theme. On the right, click Options and
Change Logo
3. Browse to your logo file on your computer and select Fast Fido’s New Logo
and click Open.
4. Click Upload to begin the import. The new logo will appear.
The new logo appears instantly on all invoices, even ones that have been already issued or paid.
Open an existing invoice and Preview to see how it appears.
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Practice Exercise #6: Editing default payment terms
1. Settings > General Settings > Invoice Settings
2. Click the Default Settings button at the top.
3. Change the options for the default due dates.
a. Change Bills Default Due Date to the “15 days after the bill date.”
b. Change Sales Invoices Default Due Date to “20 days after the invoice
date.”
c. Adjust the Purchase Order numbering to begin with “2000” by changing
the Next Number field.
d. Click Save.
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Selecting the Show Outstanding Bills option will include a link on online invoices to all outstanding bills.
You will need to keep your bank reconciliation up to
date to ensure the customer is receiving the current balances.
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Email and Financial Settings
The client asks if you can edit their default email template to remove the ‘USD’
that appears in their email. You know this is the currency code Xero uses in their
email template. Also, since the client set up their own Xero organization, you want
to make sure their financial settings and tax defaults are correct.
Practice Exercise #7: Editing email settings
1. Settings > General Settings > Email Settings
2. Access Templates and click Edit to the right.
3. Find the Sales Invoice DEFAULT email template and click Basic.
4. Delete “[Currency Code]” from the body of the email in two places to prevent
“USD” from showing up on invoices.
5. Click Save.
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Practice Exercise #8: Updating Financial Settings
1. Settings > General Settings > Financial Settings
2. Lock dates for both types of users as of December 31, 2016.
3. Change the Time zone to Mountain Time (US & Canada).
4. Click Save.
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Time zone is important for keeping an accurate record in the notes & history screen and leaving an audit trail in Xero.
Xero Practice Exercise Set Contacts
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Importing Contacts
Your client provided you a file with contacts from their legacy system. They would
like them imported into Xero since they contain addresses and other information.
Practice Exercise #9: Importing contacts 1. Contacts > All Contacts
2. Access your contacts dashboard.
3. Click the Import button along the upper menu.
4. Browse your computer to locate your file labeled Fast Fido’s Contacts.csv
and click Open.
5. Check Ignore empty fields so Xero will not overwrite existing data with blank
fields.
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6. Click Import to begin the process.
7. Review the summary notice given by Xero. (Ignore warnings. The warning
message pertains to the Tracking Categories that have been set up in the Demo
company. If you do not have tracking categories in your organization, you will
not receive this message.)
8. Click Complete Import.
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Merging Contacts
After importing your client’s contacts, you review the listing. You notice there
appears to be two records for the same contact: ‘3 Dogs Bakery’ and ‘3Dogs Bakery’.
You will need to eliminate the duplicate by merging these contacts.
Practice Exercise #10: Merging contacts 1. Contacts > All Contacts
2. Select ‘3Dogs Bakery’ (the misspelled duplicate) by clicking the name
highlighted in blue. Xero will bring you into the contact information. At the
top right, select Options and then Merge.
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3. Xero will prompt you to enter which contact you would like to merge history
with. Type “3 Dogs Bakery” and then select Merge.
4. View the contact list on the All tab. You will no longer see “3Dogs Bakery”,
the one you originally selected and eliminated.
5. You customer also tells you that “Bayside Club” and “Bayside Wholesale” have
been duplicated in Xero as well.
a. You decide that the “Bayside Club” is the correct contact and decide to
merge these contacts as well.
b. Use this alternate method of merging contacts.
i. On the main Contacts screen, check the box to the left of
“Bayside Wholesale.”
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ii. Select Options at the top of the Contacts screen, then Merge.
iii. Select “Bayside Club” to merge the history with. Select Merge.
6. Review the All contacts tab to see that “Bayside Club” remains as the contact.
When merging, Xero will archive the contact you select first and then keep the contact selected second.
Xero will automatically designate a new contact as either a
Customer or Supplier depending on the transactions associated with it.
Xero Practice Exercise Set Inventory
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Setup Inventory Listing
You have a partial listing of inventory items from your client. They will be offering
more services to their clients as well as a few inventory items. They have given you a
file of the current items along with the details of the new items that need to be added.
You will need to update the file and import the inventory items into Xero.
Practice Exercise #11: Preparing inventory file for import 1. Open the Excel file Fast Fido’s Inventory Items.
2. Enter the following new tracked inventory item to the bottom of the listing.
Use a sales tax rate as “Tax on Sales (9.25%).” You can copy and paste from
the last line.
Item Code Item Name
Sales Description
Sales Unit Price
Sales Account
Inventory Cost of Goods Sold
LGBED Doggie Bed Lg
Large & Comfy Doggie Bed
50.00 401 140 500
SMBED Doggie Bed Sm
Small & Comfy Doggie Bed
40.00 401 140 500
3. Enter the following new services (untracked) inventory items to the listing with
the Sales Tax Rate of “Tax Exempt”:
Item Code
Item Name
Sales Description Sales Unit Price
Sales Account
Inventory Cost of Goods Sold
OVER Overnight Overnight dog sitting per night
100.00 400
TRICKS Tricks Teach your dog tricks-30 min increments
25.00 400
COURSE Dog Course Run your pooch through the dog course
35.00 400
4. Save your .csv file on your desktop where you can locate it easily to import into
Xero.
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When your import file contains an inventory general ledger account number and a cost of goods sold general ledger account number,
Xero automatically sets the item up as a tracked inventory item.
Import Inventory
Now that your file is ready, you can import the inventory into Xero. Take your newly
updated Inventory file and import it into Xero for your Client.
Practice Exercise #12: Importing inventory 1. Accounts > Inventory
2. At the top right, click Import and then select Items.
3. Browse to your desktop and locate your .csv prepared inventory file from the
step above.
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4. Click Continue.
5. Review your summary from Xero for any errors.
6. Click the Complete Import button to accept the import.
Update Inventory Balances on Hand
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Your client has provided you the balances and cost of their inventory items on hand
as of January 31, 2018. There is some information in Xero already, so you will need to
update the missing balances on hand in Xero. Below are the balances on hand that
your client has provided:
Item Code (do not edit)
Item Name (do not edit) Quantity on
Hand
Total Value on Hand
EXTEND Extendable Dog leash 2 20.00
LEASH Dog leash 5 25.00
LGBED Doggie Bed Lg 5 125.00
LGCOLLAR Large Dog Collar 5 50.00
LGHARNESS Large dog harness 5 50.00
LGJACKET Branded Jacket Large 6 42.00
LONGLEASH Long Dog leash 4 36.00
MDCOLLAR Medium Dog Collar 5 45.00
MDHARNESS Medium dog harness 5 45.00
MDJACKET Branded Jacket Medium 10 60.00
POOP Doggie Poop Bags 10 25.00
SMBED Doggie Bed Sm 5 100.00
SMCOLLAR Small Dog Collar 5 40.00
SMHARNESS Small dog harness 5 40.00
SMJACKET Branded Jacket Small 3 15.00
TSL - Black T-Shirt Large Black 5 100.00
TSM - Black T-Shirt Medium Black 4 80.00
TSS - Black T-Shirt Small Black 7 140.00
XTCOLLAR Extra Large Dog Collar 5 55.00
XTJACKET Branded Jacket Extra large 2 16.00
Practice Exercise #13: Updating inventory balances 1. Accounts > Inventory
2. In your Inventory dashboard screen, select Import then Opening Balances.
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3. Choose the correct date.
4. Choose the link Download the existing opening balances. This will give you
the correct template for the upload, as well as the existing balances on hand,
which you would like to keep. Use this file to update the balances and value of
each and re-import it back into Xero.
5. In Excel, edit the newly downloaded file and prepare it for upload:
1. Enter the new balances and values of the items in the file as provided
above.
2. Add “500” as the Adjustment Account for each row, including
replacing “140” for the black T-shirts.
3. Save the file to your desktop so you can locate it easily to upload.
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6. Return to Xero and browse to select the revised file and click Open.
7. Click Continue to complete the import process.
8. Review the summary of the import from Xero. Click Complete Import to
accept.
9. Xero returns you to the inventory dashboard where you can review your
quantity on hand and complete listing of both tracked and un-tracked items.
Xero takes tracked inventory very seriously. If your item is tracked, Xero will not allow a sale of the item if there
is not enough inventory on hand.
Adding Inventory Items
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After your client’s import is complete, they notify you of an item inadvertently left off
from their additions list. You will need to add this item to Xero manually. The client
also mentions that it would be helpful to be able to enter a policy about prepaid
services to invoices as efficiently as possible when needed.
Practice Exercise #14: Adding new inventory items 1. Accounts > Inventory
2. Click +New Item and enter the information as follows:
a. Item Code = “XTHARNESS”
b. Item Name = “Extra Large Harness”
c. Click the box ‘I track this item’.
d. Select the Inventory Asset Account “140- Inventory.”
e. Under I purchase this item, enter Cost of Goods Sold Account “500-
Pet Walking Supplies.”
f. Under I sell this item, enter the unit price $50 and the revenue account
number of “401- Pet Accessory Revenues.” (Notice that the Tax Rate
defaults to “Tax on Sales (9.25%)”.)
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g. Click Save.
Practice Exercise #15: Adding a description-only inventory item 1. Accounts > Inventory
2. +New Item
3. Enter “PREPD” as the Item Code.
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4. Be sure that the only option selected is I sell this item.
5. Under Sales Description type “Prepaid services must be redeemed within one
year of purchase.”
6. Click Save.
Adjusting Inventory Balances
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The client tells you that there are 10 of the Extra-Large Harnesses that need to be
added to the inventory balance.
Practice Exercise #16: Adjusting inventory quantity on hand 1. Accounts > Inventory
2. From the inventory dashboard, locate the item XTHARNESS and click into
the item.
3. From the Options menu, select New adjustment.
4. Edit the items in the adjustment window:
a. Adjustment type = Increase quantity
b. Date = January 31, 2018
c. Adjustment = 10
d. Cost price = 20.00
e. Adjustment account = 500- COGS-Pet Walking Supplies
f. Write a brief explanation in the Notes.
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5. Click Review Adjustment
6. Xero provides a summary of the adjustment to be made. Click Post
Adjustment to accept.
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7. Review your new quantity on hand.
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Importing Sales Invoices
Your client has presented you with a listing of the invoices issued by them in 2018
that are not included in the Xero organization. These invoices need to be imported
into Xero in order to record the sales and payments received, but your client needed
help. You will need to import these invoices.
Practice Exercise #17: Importing sales invoices 1. Accounts > Sales
2. Click the Import button in the upper menu.
3. Browse and Select the file Fast Fido’s Sales Invoices.csv to import into
Xero.
a. Choose No, ignore the address details.
b. Choose Tax Exclusive for the unit amount.
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c. Select Import to begin the import process.
d. Once Xero processes your file, review your import summary from Xero.
e. Click Complete Import.
f. Xero will bring you to your listing of Draft invoices where all the newly
imported invoices can be found.
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g. Since these invoices are still in Draft status, they are not recorded in
Xero as final and have not posted to the general ledger. Select the check
box on the header line to highlight all the draft invoices to select them.
h. Select Approve to approve the draft invoices and have them reflect in
the financial statements.
If you have multiple pages of invoices in your Draft listing, you may have to approve a page at a time.
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New Sales Invoice
Your client would like you to create an invoice that will be printed and mailed to their
client.
Practice Exercise #18: Creating a sales invoice 1. Accounts > Sales
2. +New
3. Enter the invoice details:
a. To = “Bonnie Ward.”
b. Date is today’s date and due date can be left as default.
c. Reference field = “Six months prepaid”
d. Item = “WEEK”
e. Qty = “6”
f. Add the policy on prepaid services by adding item “PREPD.”
g. Click Approve.
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h. View a preview of the invoice to see how the description-only item looks
to the customer. Use the Preview link at the top of the invoice screen to
see how the additional policy language looks on the invoice.
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New Recurring Invoice
Your client has told you that they just received a contract with a local senior center to
provide dog walking services every week for their residents. They are also giving the
center a 10% discount. They have asked you to send the customer an invoice each
month starting next month. A new recurring invoice needs to be set up for this
customer.
Practice Exercise #19: Creating a new repeating invoice 1. Accounts > Sales
2. Click the down arrow next to +New and choose Repeating Invoice.
3. Enter the invoice details:
a. Repeat this transaction every “1” month.
b. Enter Invoice Date of “December 1, 2018”
c. Enter End Date of “August 31, 2019.”
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d. Skip the options to Save as Draft, Approve or Approve for Sending for
now.
e. Invoice to “Blue Hair Senior Center.”
f. In the Reference field, use the Insert Placeholder pulldown to select
Month. Type “Services” in the reference field after the placeholder for
Xero to automatically populate the correct month on each invoice.
g. Select the inventory item WEEK, Qty “4,” Disc% “10.”
h. Return to the area marked Save as Draft, Approve and Approve for
Sending.
i. Mark the invoice Approve for Sending so it will automatically be issued
each month and sent to the customer.
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j. Once you do this, Xero will skip to the email template to be used. Xero
will provide the email template that will be the body of the email when
the invoice is issued.
k. Review the email template message to be sent.
i. Do not include PDF attachment (leave unchecked) as an option.
ii. Check Mark as sent option.
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i. Click Save to save the email template. Xero will return you to
the invoice to complete data entry.
l. Return to the invoice data entry screen. Review the invoice and click
Save.
4. Xero will return to your Invoices dashboard. View the repeating invoices Xero
will issue each month.
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Invoice Status
See how Xero tracks invoices when they are opened by sending an invoice to yourself,
opening it and then viewing Xero’s changes.
Practice Exercise #20: Viewing invoice status and history
1. Accounts > Sales
2. Create a new invoice under +New and Invoice.
Enter discounts as a different line item if you want them to show separately on the invoice. Using the designated Disc%
column field will net the discount with the sale and not show separately on the invoice. It will post a discounted amount to the
revenue account.
If you would like to show revenues at a gross amount on the general ledger, you will need to use two different lines on the invoice- one
for the revenue, one for the discount which should post to a contra-revenue or expense account line.
Repeating invoices can be used to schedule emailed invoices. Set the end date to be the day after the start date and Xero will send your
one-time invoice on the date you choose.
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3. For contact, create a fake contact that can be easily identified. We used ‘Test
invoice’.
4. Allow the defaults of Date, Due Date, Invoice # and Branding.
5. Use the inventory item BIG with a quantity = 10 for a total invoice of $350.
6. Approve the invoice.
7. Use the Email button to mail the invoice to your email address.
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a. Be sure to not to check Include PDF attachment in your email
options.
b. Check the Mark as sent option.
c. Click Send.
8. Return to your Sales dashboard. Click the Awaiting Payments bucket to
display all the invoices awaiting payments.
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9. Locate your test invoice.
10. Notice Xero shows Sent in the last column labeled Sent, letting you know that
the invoice has been emailed to the customer.
11. Login to your email account and locate the email from Xero. Notice there is no
attachment with the email, only a link to access the invoice. Click the link and
view the test invoice.
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12. Review the invoice sent by Fast Fido’s by clicking the link in the email.
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13. Click back to your Xero browser. Return to your Xero Awaiting Payments
screen and refresh your screen.
14. Notice Xero has changed the Sent column to read Viewed.
15. Click into the invoice and scroll to the bottom of the screen to the button
Show History. Notice that Xero shows four entries of the history of the
invoice, including when it was viewed using the unique invoice link.
If you would like to track when a customer opens the invoice sent, be sure NOT to include the PDF attachment with the invoice at the
bottom of your email options.
Forcing the client to click on the link has Xero track exactly when the invoice is viewed.
Voiding Invoices
Approved invoices are not necessarily Sent invoices. You must first approve the invoice and then send the invoice.
If you mail invoices, Xero gives you the option to mark the invoice as sent
when you opt to print the invoice. If you use electronic invoices, the option to mark as sent is in your email template.
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Delete the test invoice you just created so it is not reflected in the client’s records.
Practice Exercise #21: Voiding an invoice 1. Accounts > Sales > Awaiting Payment
2. Open Test invoice.
3. Click the Invoice Options and select Void.
4. Confirm that you want to void the invoice.
5. Return to the Sales dashboard and the blue link See all.
6. You can find the invoice by using the Search button, searching the term
“Test,” and checking the box to Include Deleted & Voided invoices.
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7. Once located it will be shown with a voided status.
Editing Invoices
Invoices can be fully edited or voided if they do not have a payment applied against
them. Only certain fields on invoices with payments applied can be edited. Access a
sample of invoices to see the difference.
Practice Exercise #22: Editing an invoice 1. Accounts > Sales > Awaiting Payment
2. Locate Invoice INV-0027 in the listing.
3. Open the invoice and choose Invoice Options then Edit.
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4. Note the alert from Xero that only certain fields can be edited. Amounts that
affect the invoice totals cannot be edited after a payment has been applied.
5. Click through the fields and see which fields can be edited. They are:
Contact Due Date
Invoice # Reference
Branding theme Description
Account Region (Tracking category)
6. Click Cancel and return to the Awaiting Payment detail listing of invoices.
7. Locate invoice INV-0038 in the listing.
8. Open the invoice and choose Invoice Options then Edit.
9. Click through the fields and see that all the fields can be edited. This is because
no payment has been applied to the invoice yet.
10. Change the Quantity of the Golf Balls to 10 to verify.
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11. Click Cancel and return to the previous screen.
Creating and Converting Quotes
Follow the process of creating a quote, issuing it to the customer and converting to an
invoice once the customer accepts. Create a quote and send it to yourself. Once a
quote is accepted, it is easily converted to an invoice.
Practice Exercise #23: Creating a quote 1. Accounts > Sales
2. Create a new quote under +New and Quote.
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3. In the new quote screen, enter the quote details as follows:
a. For this quote, use the same contact used in Practice Exercise #3. Our
example was “Test invoice.” Because the contact was used previously,
Xero will auto fill the contact name as you type.
b. Use tomorrow’s date by typing “+1” in the Date field.
c. Use an expiration date 90 days in advance by typing “+90” in the +1
field.
d. Use the default quote number issued by Xero.
e. Enter a reference of “Test Quote” in the reference field.
f. Enter the inventory item BIWEEK and enter a quantity of 4.
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g. Enter the inventory item SMBED and tab to the default quantity of 1.
Notice the black box that appears telling you the quantity on hand.
h. Under the Terms box, enter the text “This quote is good for 90 days.”
i. Click Send.
4. Review the body of the Quote email.
5. Click Send.
6. Return to your sales dashboard to the Quotes section below the Invoices
section. Notice the Quote under the Sent category.
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7. Login to your email account and locate the email from Xero. Notice there is no
attachment with the email, only a link to access the quote.
8. Click the link and view the test quote.
9. Click the green Accept button at the top of the window.
Other date entry shortcuts can be found at https://help.xero.com/us/DateShortcuts
If you are using tracked inventory in your quotes, Xero will allow you issue the quote without affecting your inventory balances
on hand. Once the customer accepts the quote, the inventory balance is reduced.
Fast Fido’s Dog Walking
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Practice Exercise #24: Converting a quote to an invoice 1. Click back to your Xero browser. Navigate to Accounts > Sales
2. If necessary, refresh your screen to see the changes made.
3. Xero has moved the accepted quote to the Accepted category.
4. Click into Accepted and open the quote to view the accepted quote detail
screen.
5. This quote has been marked Accepted. From this screen, we can create the
invoice directly.
a. To create the invoice, click the green Create Invoice at the top of the
screen.
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b. Xero will prompt to create a new invoice. Click the box Mark as
Invoiced. Click Create.
c. Xero will bring you to the New Invoice screen. All of the information
entered into the quote has been transferred to the new invoice
automatically. Click Approve to post the invoice.
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6. Xero will create the new invoice, issue a new invoice number, and assign the
invoice to the Awaiting Payments bucket of the accounts receivables.
7. Click Preview to preview the invoice on your screen.
8. Using the steps from the earlier practice exercise, Void this test invoice you
created.
If the customer fails to accept the quote online, you can achieve the same result by clicking the Options button and then clicking Mark as
Accepted for the customer.
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If you leave Mark as Invoiced unchecked, the accepted quote will remain in the Accepted bucket of the Quotes dashboard even though
the invoice was issued. It’s best to mark it as invoiced so it will be removed altogether.
Customer Credit Notes
Your client has informed you that they have forgotten to issue a promised discount to
one of their clients City Limousines. They have calculated an amount of $169.95 as
the discount. Your client has already deposited the check from City Limousines,
which is net of the discount. You will need to issue the credit note for your client so
the pending invoice balance is correct.
Practice Exercise #25: Issuing a customer credit 1. Accounts > Sales
2. Create a new invoice under +New and Credit Note.
3. Enter the following information for the credit note:
a. Use Contact “City Limousines.”
b. Use Date August 1, 2018.
c. Use Reference “Discounts Applied.”
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d. For the Description, enter “Omitted Discount.”
e. Enter Quantity of 1 and Unit Price of 169.95.
f. Enter - “400- Dog Walking Revenue.”
g. Click Approve.
4. Xero will list all the open invoices for the customer. Apply the credit note to
the most recent Inv-0034 by typing the amount of $169.95 in the Amount to
Credit field. Click Allocate Credit.
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5. Xero will show the credit on the screen.
6. Back in the Awaiting Payments screen, Xero will identify invoices with
applied credits with a yellow tag.
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Credits can also be issued directly in the invoice affected. Open the invoice and use the dropdown box under Invoice Options.
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Entering Bills
Your client has provided you with a listing of bills that have not been entered into
Xero. They will need to be entered so they can be paid.
Contact Invoice (Reference)
Number
Amount Expense Invoice Date
Right Angle Advertising Agency
RA-653 $1,300.00 New logo development (600-Advertising)
May 15, 2018
Orange County School Board
3312018 $224.00 Past Due Sales Tax (220-Sales Tax)
March 31, 2018
ACL Conference 8018922 $75.00 Conference Registration (676 Dues &
Subscriptions)
April 15, 2018
Websites For The People
16524 $1,000.00 Deposit on new website (650 Website and
Domain Expenses)
April 28, 2018
Practice Exercise #26: Creating a bill 1. Accounts > Purchases
2. Access your Purchases dashboard.
3. Click +New | Bill along the upper menu.
4. Enter the Contact as “Right Angle Advertising Agency.”
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5. Enter the invoice date in the Date field.
6. Use the default due dates from Xero.
7. Put the invoice number in the Reference and Description fields.
8. Enter the Total of $1,300.
9. Use amount and expense to complete the line item in the body of the bill.
Ignore the Region field.
10. Click Approve to save the invoice.
11. Click Add Another Bill.
12. Using the method above, enter the Orange County School Board invoice
from the information above. Click Approve.
13. Using the method above, enter the ACL Conference invoice from the
information above. Click Approve
14. Using the method above, enter the invoice for Websites for the People. Use
your File icon next to Reference to upload a copy of the invoice Websites for
the People Inv 16524.
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15. Click Approve to save the invoice.
16. Return to your Purchases dashboard.
Use your File Inbox create a queue of Bills to be paid.
Find out how to use your File Inbox with email and the Xero Touch app https://help.xero.com/us/FilesEmail
Writing Checks
Your client has asked you to write a check for two outstanding bills: Right Angle Advertising, and
Orange County School Board. They will hand deliver the checks themselves. They also have the
check stock at their office, so you will need to produce a .pdf image of the check your client can use
to print on the check stock. They have confirmed their checks begin with the number 3001.
Practice Exercise #27: Printing checks 1. Accounts > Purchases
2. Click Awaiting Payments to see a listing of invoices due.
a. Click the Due Date column to sort by date due.
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b. Click the boxes to the left of:
i. Right Angle Advertising (Ref. RA-653) for $1,300
ii. Orange County School Board (Ref. 3312018) for $224
c. Select Make Payment from the menu.
d. Choose a payment method Pay By Check.
e. Xero will bring you to the Pay by Check Screen.
f. In the Memo field for the Orange County School Board check, make a
notation of “March 2018.”
g. Confirm the Checking Account as the correct bank account.
h. Click Check Numbering and enter your beginning check number as
3001.
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i. Click OK.
j. Click Save & Print PDF.
k. Xero will produce and download a .pdf file of the check images. Review
the file to send to your client. Save this file on your desktop where it can
be easily located.
Check formatting can be found within General Settings under Check Styles.
Using Purchase Orders for Inventory
Your client has a new vendor to supply dog strollers, a new item for their retail sales. The vendor,
Dogstrollers.com, requires a purchase order for each order that is placed. They have asked you to
issue a purchase order for them in Xero, so they can send a copy to the vendor along with the
artwork of the logo to be printed on the strollers.
Practice Exercise #28: Creating a purchase order with new inventory
item
1. Accounts > Purchases
2. Click +New and Purchase Order.
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3. Enter the following information for the purchase order:
a. Use the new client “Dogstrollers.com”
b. Enter Date of August 1, 2018.
c. Modify delivery date by entering the shortcut of “+45” in the
Delivery Date field.
d. Use the Reference “Initial Order.”
4. Use the File icon to upload a copy of the Dogstrollers.com quote.
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5. In the Item field, use the drop-down arrow to list the inventory items. Use the
+Add Item to create a new inventory item directly from this purchase order
screen
6. Enter the following information for the new inventory item:
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a. Item code = STROLLER
b. Item = Dog Stroller
c. Click I track the item and choose 140- Inventory as the
account.
d. Click I purchase this item. Enter the cost of $12.00, choose
“COGS-Pet Walking Supplies” as the account.
e. Click I sell this item. Enter a sales price of $45.00, choose
“Pet Accessory Revenue” as the account and the Tax on Sales
(9.25%) rate.
f. Enter a brief description to appear on the invoice- “Take your
best friend with you on your walk.”
g. Click Save.
7. Xero will return you to the Purchase order screen to continue entering the
information in the purchase order. Notice that Xero has populated the cost and
revenue account for you.
a. Change Quantity to 10.
b. Click Approve to save the purchase order.
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8. In the approved invoice screen, click Print to download a PDF copy of the
Purchase Order to send to the vendor. Save this download on your desktop
where it can be easily located.
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9. Navigate to your inventory account to see the listing of the new inventory item.
a. Accounts > Inventory
b. In the search field, type in ‘stroller.’
c. Notice the quantity on hand is zero. Xero will not increase
tracked inventory balances until a Bill is created.
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In Xero, “print” means to download a PDF.
Editing Purchase Orders
Your client informs you that the new vendor was not able to fulfill the entire order of
ten strollers. They are only able to fulfill half the order. The remaining five strollers are
on back order and expected in another 45 days. Part of the purchase order will need to
be received to properly reflect in inventory, so they can be sold.
Practice Exercise #29: Converting a purchase order to a bill and
tracking inventory changes
1. Accounts > Purchases
2. Access the listing of approved purchase orders.
3. Open the purchase order issued to Dogstrollers.com.
4. Click Options and Copy to…
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5. Choose the option Bill. Uncheck the box Mark this purchase order as fully
billed. Click Create draft.
6. Xero populates the new bill according to the information entered in the
purchase order.
a. Since only half the items ordered were actually received, change the Qty
to “5.”
b. Click Approve.
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7. Navigate to Inventory to see the inventory item change in balance. Type
‘stroller’ in the Search field. Notice that the quantity on hand has changed to
five.
Practice Exercise #30: Editing a purchase order, converting to a bill,
tracking inventory changes
1. Accounts > Purchases
2. Return to the open purchase orders in Approved Purchase Orders. Notice that
the purchase order for Dogstrollers.com is still in the listing because we did not
select “Mark this purchase order as fully billed” in the last exercise. Open the
purchase order.
a. Under Options, choose Edit.
b. Change Quantity to “5” (the original order was ten but five were
received, leaving five on back order.)
c. Click Update. This will correct your quantity on back order.
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Importing a Bank Statement Your client has a Business Checking account, and a Sunny Bank credit card. They also opened a new National Bank Business Checking account during the year. The New Checking account and the Sunny Bank credit card are missing bank activity from 2018. You have two .csv files containing the missing bank and credit card transactions and information from your client. You will need to import the activity into Xero so the transactions can be reconciled for 2018.
Practice Exercise #31: Importing bank activity 1. Accounts > Bank Accounts (or Dashboard view of bank accounts)
2. Select New Checking Account.
3. Click Manage Accounts or the bullet list on the right if you are accessing
from the Dashboard. Select Import a Statement.
4. Browse to the Fast Fido’s New Checking Account Transactions.csv file.
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5. Click Import to begin the import process.
6. Review the mapping of the file columns. The column headings in the .csv file
(left side of the mapping window) must be assigned to a similar field in Xero.
Xero will automatically try to configure these fields, but you can use the
dropdown arrows to make any changes.
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7. Check the first few transactions by clicking the Next link at the top right of the
window. Notice the changes on the right hand side of the window as you scroll
through.
8. When you are satisfied your mapping is correct, click Save.
9. Review your summary from Xero showing how many lines have been
imported.
10. Click OK to complete the import and review the transactions.
11. You will be brought to the reconciliation screen to begin the reconciliation
process.
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12. Before you begin reconciling, import the transactions for the Sunny Bank
Credit Card account.
a. Accounts > Bank Accounts > Sunny Bank Credit Card.
b. Refer to steps 1-10 for importing the Sunny Bank Credit Card.csv file
to the Sunny Bank Credit Card account on your dashboard.
13. Once you have completed your imports, your dashboard should look like the
image below, with transactions in the Checking, New Checking and Sunny
Bank Credit Card accounts to be reconciled.
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Code & Reconcile Transactions Now that the activity has been added to Xero, the transactions need to be reconciled. You need to provide the correct coding for the transactions you just imported for Fast Fido’s Credit Card and New Checking accounts.
Practice Exercise #32: Reconciling draws as spend money
transactions
1. Dashboard
2. Within the New Checking Account tile, click the blue Reconcile 66 items
button.
3. Notice the transactions highlighted green. The Match tab is highlighted green
by Xero because Xero is auto-matching a bank feed line to a transaction already
recorded in the system.
a. Xero indicates that the bank transaction matches the amount of the
invoice in Xero by turning the transaction card green.
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b. Click OK to reconcile each of these transactions, where the invoice
number matches. Watch out for transactions that should not be
reconciled to each other. NOTE: The $1,000 Transfer Sunny Credit is
auto-matching to the Websites for the People invoice because the
amounts are the same. Do not reconcile.
4. Find the Petsmart transaction for $16.50.
a. Use the Create tab to code the first payment. Enter the following:
i. Who: “Petsmart”
ii. What: “500 COGS- Pet Walking Supplies”
iii. Click OK to reconcile
5. Refresh your screen to see how Xero uses the Auto Suggest feature to help you
code your transactions. Scroll through the unreconciled transactions. (You may
have to go to the next pages.)
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6. Notice that Xero now suggests a code for all the Petsmart transactions to Pet
Walking Supplies for you. Leave those Petsmart transactions unreconciled for
now.
Practice Exercise #33: Reconciling credit card payments
1. Dashboard > New Checking Account
2. Find the bank line “Transfer Sunny Credit” for $1,000. This is a payment on
the Sunny Bank Credit Card. Credit card payments, where the credit card is
listed as a bank account in Xero, must be shown as a transfer. The expenses
will be recorded as part of the credit card bank feed. The movement of cash
from one account in Xero to another is recorded as a Transfer.
3. Use the Transfer tab to select Sunny Bank Credit Card as the coordinating
bank account. Enter a reason for the transfer under the Reference field.
4. Click OK to complete the reconciliation.
5. Complete the remaining three transfers to the Sunny Bank Credit Card from
the New Checking Account.
6. Toggle to the Sunny Bank Credit Card by clicking on New Checking Account
at the top of the screen, then selecting Sunny Bank Credit Card.
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7. Find the transfer transactions. (They may be on the last few pages of
transactions.) You will notice that Xero has already identified the transfer
between accounts for you. Click OK to accept these.
Practice Exercise #34: Using the Discuss tab
1. Dashboard > New Checking Account
2. Return to the New Checking Account. Find the transaction from City
Stationary for $105 and use the Discuss tab to leave yourself a note to follow-
up with the Client for the purpose behind the transaction.
a. Click Save. Notice the Discuss note stays visible after you click save.
The client can see this note as well.
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Practice Exercise #35: Creating bank rules
1. Accounts > Bank Accounts > New Checking Account
2. You notice several charges for 3 Dogs Bakery and decide you should create a
Bank Rule to automate coding of these expenses.
a. Locate the first 3 Dogs Bakery transaction for $62.34.
b. Click the Create Rule link above the dollar transaction on the first 3
Dogs Bakery transaction. Xero will bring you to a new window to create
a Spend Money Rule.
c. Change the criteria (#1) to the Payee “contains” “3 Dogs Bakery.”
d. Set the contact (#2) as “3 Dogs Bakery.”
There is a three-level hierarchy of matching in Xero:
1. Match by amount: When Xero knows of about a transaction before the bank feed (i.e. a payment, a bill or an invoice) Xero will try to auto-match that notice with a bank transaction.
2. Match by bank rule: When certain criteria are met, Xero will propose applying a rule for account coding.
3. Match by auto-suggest: When Xero sees a set of bank feed data that matches a previous data set, it will suggest the same coding that was applied before.
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e. Allocate the expenses (#4) to “500- Pet Walking Supplies” at 100%.
f. Set the reference (#5) to “from the Description.”
g. Set the target bank account (#6) as all bank accounts so the rule will
apply to each account with a charge matching the criteria in Step #1.
h. The default bank rule title (#7) will be the original payee. Change it to
“3 Dogs Bakery -Pet Walking Supplies.”
i. Click Save to create the bank rule. Xero will bring you back to the
reconciliation screen.
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3. Notice that once the reconciliation screen appears again and you scroll through
the transactions, all transactions for 3 Dog Bakery are now automatically
assigned by the new Bank Rule. Do not reconcile these items yet. We will go
back to them.
4. Create a Spend Money Rule for Speedy Services using the same method.
a. Find the Speedy Services transaction for $9.80.
b. Payee “contains” “Speedy Services.”
c. Set the contact to “Speedy Services.”
d. Code the transactions to “656- Printing & Stationary.”
e. Set the reference as “from the Description.”
f. Target all bank accounts.
g. Name your rule “Speedy Services- Printing.”
Practice Exercise #36: Cash coding
1. Accounts > Bank Accounts > New Checking Account
2. Once you have created the above bank rules, click the Cash Coding tab near
the top of your screen in the New Checking Account.
Give your bank rules descriptive titles so the coding is clear when
it appears on the Reconcile screen.
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3. Notice that your transactions for Speedy Services and 3 Dogs Bakery have
already been coded according to the bank rule you just created.
4. Click Save and Reconcile All at the bottom of the screen.
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5. What remains are the transactions that do not have a bank rule associated with
them. These transactions need to be coded separately.
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6. To code the remaining transactions in your cash coding screen, click on the
Payee column to sort by that column. This will sort the transactions in
alphabetical order and allow us to code similar transactions at once.
7. Highlight the two Best Buy Electronics transactions by clicking the boxes to
the left.
8. Under the Account column of the first transaction highlighted, start typing
“computer” in the field. Xero filters the accounts for you.
a. Once you select account 160-Computer Equipment and then using the
keyboard, click Tab, both accounts highlighted will be coded to the
same account.
b. Click Save and Reconcile Selected at the bottom of the screen.
9. Highlight the Chipotle transactions. We must create a new account for Meals
for these transactions. We can do this directly in Cash Coding.
a. Under Account use the pull down to select Add new account…
b. Add the following new account to the system
i. Account Type = Expense
ii. Code = 622
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iii. Name = Meals
iv. Click Save.
v. Apply Meals to all Chipotle transactions.
vi. Click Save & Reconcile Selected.
10. Using this method, finish coding these transactions in this screen.
a. Doggie Duds = COGS- Pet Walking Supplies
b. Petsmart = COGS- Pet Walking Supplies
c. Interest earned = Interest Income
Practice Exercise #37: Cash coding with bank rules
Use your knowledge of bank rules and cash coding to find more bank rules to be created in the other two accounts. This will greatly speed up your cash coding process.
1. Accounts > Bank Accounts > Sunny Bank Credit Card
2. Switch to the Cash Coding tab for the Sunny Bank Credit Card account.
a. Sort on by Description to group like transactions together. Consider
which rules need to be created.
b. Use the down arrow button on the right to go to the bank rule screen.
Cash Coding is a great way to clear many transactions at once, so you can “reduce the noise” and focus on the transactions that need more
attention.
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c. For each of the payees below, create a bank rule using “contains” and a
portion of the payee or description line. After each rule, reconcile the
affected transactions.
a. Bow Wow Babies= COGS- Pet Walking Supplies
b. Carl’s Jr= Meals
c. Cezar Milan= COGS- Pet Walking Supplies
d. Office Depot= Office Expenses
e. Shell = Automobile Expenses
Practice Exercise #38: Reconciling deposits as receive
money transactions
1. Accounts > Bank Accounts > New Checking Account
2. Your client has informed you the $2,500 deposit from Twilight Senior Living
Center was a result in a billing error. Your client failed to bill the center for the
first five months of 2018. Your client and center settled upon the amount for
2018 but there was no invoice issued to the center. The entire amount belongs
to Dog Walking Revenue.
a. Using the Create tab, code the transaction using the contact Twilight
Senior Living and the revenue account 400- Dog Walking Revenue.
b. Click OK to complete the transaction
Different bank feeds and downloads will show data in different fields and columns. Use cash coding to easily see which information flows to
which field for purposes of creating bank rules.
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3. Your client also informs you of a similar situation for the deposit for Henry
Moore for $500. No invoice was issued previously. The entire amount belongs
to Dog Walking Revenue.
a. Using the Create tab, code the transaction using the contact Henry
Moore and the revenue account 400- Dog Walking Revenue.
b. Click OK to complete the transaction.
Practice Exercise #39: Matching deposits with multiple
invoices 1. Accounts > Bank Accounts > New Checking Account
a. In the New Checking Account, scroll to the deposit from Brandon Diaz.
Xero did not match it earlier since it did not find an invoice for the
matching amount.
b. Click on Find & Match to show the invoices still Awaiting Payment in
the system.
2. Locate three invoices issued to Brandon Diaz by using the Search box.
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3. Select by clicking on the boxes to the left.
4. Notice Xero now shows a green screen and is ready to be reconciled. Click
Reconcile at the bottom of the screen.
5. Using the same method, find and match the two invoices that match the bank
deposit transaction for Judith Evans for $519.63.
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6. Switch to the Checking Account. Find & Match the four invoices from City
Limousines that match the $1,000.00 e-Bank Deposit.
Matching Spend Money transactions
Your client has informed you of a few bank transactions that need to be matched to
bills or payments entered into Xero. Some invoices have been entered where others
have not or do not match the amounts that have cleared the bank.
Practice Exercise #40: Matching draws with multiple bills
1. Accounts > Bank Accounts > Checking Account
2. Scroll to the payment to Smart Agency for $4,500. Your client informs you that
this is a combination of one bill for $2,500 and another bill for $2,000. The
items need to be matched and cleared. Locate the bank transaction.
3. Click on Find & Match to show the bills yet to be cleared.
4. Click to select the two SMART Agency bills.
Switch between cash accounts easily in the bank reconcile screen by clicking the drop-down arrow next the bank name.
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5. Notice Xero now shows a green screen and can be reconciled. Click OK to
complete the reconciliation, or alternatively Reconcile at the bottom of the
screen.
Practice Exercise #41: Reconciling differences between
transactions and bills
1. Accounts > Bank Accounts > Checking Account
2. A Swanston Security transaction for $59.55 has cleared the bank, however the
invoice entered into Xero is for $59.54. Locate the bank transaction.
3. Click Find & Match to show the bills yet to be cleared.
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4. Search for “Swanston” in the Search field in Find & Match and click the box to
the left of the invoice located, Reference RPT652-1 for $59.54.
5. Note under step 3 that the “Total is out by .01.” Xero cannot match a pending
transaction, such as an invoice or bill, with a bank line with a different amount.
You must make an adjustment.
6. Select the +Adjustment button, then Bank Fee.
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7. Xero will provide fields to enter an additional Spend or Receive Money
transaction so that the amounts will tie to the bank line item. Since the
Swanston Security bill was coded to Office Expenses, we will create an
additional Spend Money to the same account for $.01.
8. Click Reconcile to complete the transaction.
Receive money from customers
Your client notifies you that the $450 deposit from Majestic Contracting has not
been invoiced in Xero. The payment is for partial sublet of office space for $200,
plus 5 instances of bi-weekly dog walking revenue. The payment needs to be
correctly recorded in Xero.
Bank Fee Adjustments can be coded almost any account in the general ledger, not just bank fees.
It’s a great tool for making adjustments directly in bank reconciliation without stopping your workflow to create any additional Spend or
Receive Money transactions.
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Practice Exercise #42: Create deposits for more than one
revenue type
1. Accounts > Bank Accounts > Checking Account
2. Locate the Majestic Contracting deposit of $450.
3. Click Add details.
4. Leave Received as Direct Payment.
5. Notice that the contact, date and description details appear.
6. Enter the revenue details:
a. For Sublet RM2031, enter Quantity = “1”, Unit price = “$200”,
Account = “Other Revenue (Tax Exempt)”
b. Item = “BIWEEK”, Quantity = “5”, Account = “Dog Walking
Revenue (Tax Exempt)”
c. Click Save Transaction.
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7. Notice Xero now shows a green screen and the transaction can now be
reconciled. Click OK to complete the reconciliation, or alternatively click
Reconcile.
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Overpayments from customers
Your client tells you about a deposit for $1,500 that needs attention. The deposit is
from two customers (Hamilton Smith and Rex Media) for outstanding invoices
and also includes an additional overpayment of $400 from Hamilton Smith, who
would like to apply the overpayment to future invoices. The items need to be
entered, matched and cleared.
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Practice Exercise #43: Overpayment from customers
1. Accounts > Bank Accounts > Checking Account
2. Click on Find & Match to show the invoices yet to be cleared.
3. Find the e-bank Dep for $1,500. Locate the Hamilton Smith outstanding
invoice for $550 and the Rex Media Group invoice for $550. Select each one.
4. Because the bank transaction amount differs from the invoice amounts, we
must add an additional transaction to be able to reconcile. Under Step 2,
choose New Transaction and Receive Money.
5. Xero will show a new Receive Money Screen to enter the details.
6. Change the Received as option to Overpayment.
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7. Enter the Contact as “Hamilton Smith Ltd” and a Reference and Description
of “Accidental Overpayment.”
8. Click Save Transaction.
9. Notice Xero now shows a green screen and the transaction can now be
reconciled. Click OK to complete the reconciliation, or alternatively click
Reconcile.
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10. Navigate to Accounts > Sales.
11. Open the Awaiting Payment tab. Click to detail the listing of invoices. Find
Hamilton Smith in the listing with a credit balance of $400.
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12. Create a new Invoice for Hamilton Smith Ltd to see how Xero will treat the
overpayment.
a. Click New Invoice.
b. Enter “Hamilton Smith Ltd” as the contact, being sure that Xero
recognizes an existing contact.
c. Tab through the Date, Due Date, Invoice #, Reference and Branding
fields.
d. Enter “Custom training” as the Description.
e. Enter Quantity of “1” and Unit Price of “$400.”
f. Allow Xero to use the default revenue account.
g. Click Approve.
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13. When the invoice is approved, Xero will ask if the outstanding credit should be
allocated.
14. Select Allocate.
15. Enter $400 as the Amount to Credit. Click Allocate Credit.
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16. Note on the Paid invoices tab that the invoice is fully paid.
Practice Exercise #44: Refunding overpayments from
customers
1. Accounts > Bank Accounts > New Checking Account
2. Your client notifies you that the accounts payable department of Blue Hair
Senior Center transposed the amount due and overpaid the outstanding invoice
and would like the overpayment refunded.
3. Find the deposit of $210.60 from Blue Hair.
4. Click Find & Match to show the invoices yet to be matched.
5. Select Inv-118 for $120.60.
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6. Because the bank transaction amount is different from the invoice amount, we
will have to add a new transaction to reconcile. Under Step 2, choose New
Transaction and Receive Money.
7. Xero will show a new Receive Money Screen to enter the details.
8. Change the Received as option to “Overpayment”.
9. Enter the Contact as “Blue Hair Senior Center” and a Reference and
Description of “Accidental Overpayment.”
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10. Click Save Transaction.
11. Notice Xero now shows a green screen and the transaction can now be
reconciled. Click OK to complete the reconciliation, or alternatively click
Reconcile.
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12. Navigate to Accounts > Sales.
13. Open the Awaiting Payment tab. Click to detail the listing of invoices. Find
Blue Hair in the listing with a credit balance of $90. Open the invoice.
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14. Below the invoice, locate the payment section labeled Make a cash refund.
15. Enter a date of August 15, 2018, select the New Checking Account and select
the Pay by check option. Then click Add Refund.
16. Confirm the check number and payee on the check screen the click Save &
Print PDF to create a check image.
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Practice Exercise #45: Partial payments on invoices
1. Accounts > Bank Accounts > Checking Account
2. Your client notifies you that the $200 e-Bank deposit was a partial payment
from the customer Marine Systems. The invoice entered into Xero totals $396.
The partial payment needs to be recorded against the invoice.
3. Locate the e-Bank Dep transaction for $200.
4. Click Find & Match to show the invoices yet to be matched.
5. Find and select the Marine Systems invoice for $396.00. Notice the word
“Split” that appears. Click Split.
6. Confirm the amount of the deposit, which is the amount that will be applied to
the invoice. Click Split.
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7. Notice Xero now shows a green screen and the transaction can now be
reconciled. Click OK to complete the reconciliation, or alternatively click
Reconcile.
Account Watchlist When you edited your chart of accounts earlier, you flagged the Deposits in Transit account to show on your Account Watchlist on the Dashboard, so you could make sure this account was zeroed out this year. Currently, the Deposits in Transit general ledger account is showing a YTD balance of $100 on your dashboard. You have
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located the deposit that needs to be coded to this account, so the balance will be zero. The deposit is located in the Checking Account.
Practice Exercise #46: Using the Account Watchlist
1. Accounts > Bank Accounts > Checking Account
2. Click Reconcile to locate the deposit in transit item in the checking account.
3. Locate the City Limousines deposit for $100.
4. Click on the Create tab and enter the Contact as “City Limousines.”
5. Under What enter the “Deposits in Transit” account and click Ok.
6. Return to your Xero Dashboard to see the change in the Watchlist. The YTD
balance is now $0.
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Practice Exercise #47: Putting it all together
Use your knowledge of reconciliation, transfers, bank rules and cash coding to reconcile the remaining unreconciled transactions in the New Checking and Sunny Bank Credit Card accounts.
1. Accounts > Bank Accounts > New Checking Account and Sunny Bank
Credit Card
2. Continue to code the remaining transactions as you see fit. Remember that
Cash Coding will generally be the most efficient way to reconcile. The New
Checking Account and the Sunny Bank Credit Card should have no remaining
unreconciled items.
Bank Reconciliation Reports Your client has provided you with the New Checking Bank Account bank statement
at the end of August 2018. They have also confirmed that the Sunny Bank Credit
Card was paid and closed by the end of August 2018. Run bank reconciliation reports
to confirm your balances for these accounts.
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Practice Exercise #48: Reconciliation report
1. Accounts > Bank Accounts > New Checking Account
2. Click Manage Account and Reconciliation Report.
3. Select the ending date that corresponds to the bank statement date of August
31, 2018.
4. Confirm that your ending balance for the New Checking account matches the
ending balance per the bank statement.
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Practice Exercise #49: Fixing errors at month-end
1. Accounts > Bank Accounts > Sunny Bank Credit Card
2. Using the same method as above, run a reconciliation report for the Sunny
Bank Credit Card.
3. The client tells you that the ending balance should be zero, but it is not.
4. Manage bank account > Account transactions
5. Search for the error amount of $2.94.
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6. Notice that there is a duplicate transaction. Somehow the bank feed has two
identical transactions, and one should be deleted.
7. Click into the second Bow Wow Babies line.
8. Go to Options, then Remove & Redo.
9. You must now go back to delete the bank line item from the Reconcile list. Go
to the Reconcile tab and click the X to the left of the transaction.
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10. Xero will give you a warning about deleting statement lines. Click Yes.
11. Rerun the Reconciliation Report to confirm that there is a $0 balance for the
Sunny Bank Credit Card.
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Remove & Redo will delete the Xero-side spend money and will send
the bank line back to the Reconcile list. In comparison, the Unreconcile
option does not delete the spend money, but rather, breaks the link
between the two sides.
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Inputting a Budget
Your client has finished preparing a budget for this current year with your help. It is
their preliminary budget because they expect growth this year and will prepare a new
budget at that time. They have asked you to input the preliminary budget numbers in
Xero, so you can prepare comparative reports for them this year. You will need to
enter the new budget into Xero with the information provided by the client.
They have given you the following monthly information for the budget:
Dog Walking Revenue 5,000
Pet Accessory Revenue 2,000
Total 7,000
Pet Walking Supplies 1,000
Advertising 20
Bank Service Charges 15
Consulting & Accounting 200
Dues & Subscriptions 50
Insurance 30
Rent 250
Telephone & Internet 100
Website & Domain 25
Total 1,690
Net Profit 5,310
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Practice Exercise #50: Entering a new budget
1. Reports > Budget Manager
2. Under Select Budget, pull down the arrow and select +Add New Budget.
3. Name your budget Preliminary Budget.
4. Click Save.
5. Locate the line for Dog Walking Revenue. Click into the cell for January. Enter
the amount to apply to Dog Walking Revenue each month from the above
figures.
6. Notice that a green arrow appears to the right of the cell. This arrow will allow
you to apply amounts across the budget line without reentering data. Click the
green arrow.
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7. Enter the amount under Apply fixed amount each month. Click Apply. Notice
how Xero populates each month with the new amount.
8. Using the same method, continue entering all the expenses for the budget
above.
9. Confirm your revenue, expense and profit amounts for each month.
10. Once satisfied, click Save.
Modifying the Balance Sheet
Run a balance sheet comparing July 2018 to August 2018 and publish to the Report
Library.
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Practice Exercise #51: Running a comparative balance sheet
1. Reports > All Reports > Balance Sheet [New] (You may have to use the
overflow menu under Financial Reports to see the new Balance Sheet.)
2. Click Report Settings.
3. Change Date Range to “Custom” and enter August 31, 2018.
4. Compare with to “1” previous periods.
5. Click Update.
6. Note that the default comparative period on a custom date is the prior year. We
will need to change the column dates using Report Layout Editor.
7. Hover over the body of the report until you see Edit appear in the top right
corner. Click Edit to open the Report Layout Editor.
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8. Click the column heading 31 Aug 2017.
9. Use the calendar on the right to select July 31, 2018. The column heading will
change.
10. Click Done to see the report populate.
Practice Exercise #52: Editing the body of a balance sheet
1. You also want to change the order of line items. Click Edit over the body of
the report to open the report layout editor.
2. Drag and drop the Office Equipment line up a row so it is the line before Less
Accumulated Depreciation on Office Equipment.
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3. Click Done.
Practice Exercise #53: Publishing a report
1. To publish the report to the report library, click Save As then Published.
2. Edit the title to read “Balance Sheet- Comparative as of August 2018.” Click
Save.
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3. You will now be able to find this report under the Published tab of all reports.
Be sure to give your published reports descriptive titles so they can be easily identified from main screen of the report library.
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Modifying the Income Statement Your client asks you to modify the income statement for use as a custom management
report.
Practice Exercise #54: Adding columns to the income
statement
1. Reports > All Reports > Income Statement (New)
2. Change Date Range to “Last Month.”
3. Click Update.
4. Hover your mouse over the body of the Income Statement and click on the
Edit link that appears at the top right. This will open the Report Layout Editor.
5. Within the Report Layout Editor, click on the column icon and select Date.
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6. While the new column is highlighted, change the Date Range to Year to Date.
7. Change the name of the column to “Year to Date.”
8. Click Done.
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Practice Exercise #55: Adding row groups to the income
statement
1. Open the Report Layout editor by clicking Edit in the upper right of the report
body.
2. Click on the row icon and select Group.
3. Drag the new Untitled Group row to below Operating Expenses.
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4. On the right, give the group the name “Employee Expenses.”
5. Drag and drop all of the employee related expense accounts under the new group Employee Expenses and arrange them with Wages at the top of the group.
6. Use the arrow toggle next to Employee Expenses to see how the accounts can be shown or hidden.
7. With the account lines shown, click Done. Notice how the Employee Expenses are grouped together.
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8. Save this format as a custom report, by clicking Save As then Custom.
9. Name the report “Income Statement with YTD.” Do not select make this the default view for this report. Click Save.
Practice Exercise #56: Using custom reports
1. Reports > All Reports
2. Click the Custom tab.
3. Open the custom report that you just created, “Income Statement with YTD.”
4. Change Date Range to “This Month.” Click Update.
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5. Notice that both columns change within the report.
6. Click Save As, then Published.
7. On the Publish page, select the option to Show decimals as set on each
page. This will show decimals on PDF versions of the report, rather than
rounding to the nearest dollar. Click Save.
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Accounts Payable Aging
Your client wants to know how to run an AP report easily each week to see which
vendors they owe. They would like to print it out to review.
Practice Exercise #57: Adding reports to favorites menu
1. Reports > All Reports
2. Under the Purchases reports, click the star next to the Aged Payables Detail
report and deselect the start next to the Aged Payables report.
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3. Click your browser’s refresh button while on this page.
4. The Aged Payables Detail report will now appear directly under the Reports
menu.
5. Use this method to clean up the report Favorites menu so that it includes the
Aged Payables Detail, Balance Sheet [New], Income Statement [New] and Bank
Reconciliation Summary. Deselect the Favorite star from all other reports.
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Practice Exercise #58: Running an Aged Payables Detail
report
1. Reports > Aged Payables Detail
2. Notice there is no report total of all receivables column on at the bottom, only
totals by aging date.
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6. Click the Report Settings at the top right.
7. Check the Total box under Columns and then Update.
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8. The total payables due per vendor now appears in the far-right column of the
report and at the bottom.
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Inventory Reporting
Your client has mentioned that they will be performing another inventory count later
next month. You decide to add an inventory report to their favorites menu so they
can easily access the report.
Practice Exercise #59: Inventory reporting
1. Reports > All Reports
2. Click the star next to the Inventory Item Summary (New) report to make it
available in the favorites menu. Refresh your browser.
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3. Open the report.
4. Click Report Settings in the top right corner.
5. Change Date Range to “This Financial Year.”
6. Select Closing Quantity and Opening Quantity, then click Update.
7. View the new report to show the new Opening Quantity and Closing Quantity
columns on the report.
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Practice Exercise #60: Using Business Performance tiles on
the Dashboard
Your client would like to view basic performance metrics on their Dashboard. Note
that Dashboard views are user specific, so you will have to walk your client through
customizing their own dashboard while they are logged into Xero.
1. Reports > Financial > Business Performance
2. Xero offers a selection of performance graphs. Select the star next to Gross
Profit % and refresh your browser.
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3. Return to your dashboard to see the Gross Profit % chart.
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Manual Journal Entries
When you run the income statement for the current year, you notice your client has
been coding expenses to a General Expense account. Since you know that these
expenses need to be better categorized, you will need to review and reclassify these
expenses to another account.
Practice Exercise #61: Manual journal entries
1. Run an Account Transactions report to see the details of transactions
posted to General Expenses.
2. Reports > All Reports > Account Transactions
3. Select Account 628 General Expenses.
4. Change Date Range to This Financial Year.
5. Click Update.
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6. Open Manual Journals in a new browser tab so that you can refer to this
report as you make entries. Hold the Ctrl Key and click Advisor > Manual
Journals.
7. Click +New Journal.
8. Enter the following information for the first journal entry:
1. Narration “To recode May 2018 expenses to the correct account.”
(You should use the month that appears next to the first two
transactions in your report.)
2. Date = “May 31, 2018”
3. Enter these lines:
▪ Debit Office Expenses for $65.20
▪ Debit Office Expenses for $50.00
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▪ Credit General Expenses for $115.20
4. Click Post.
9. Click +New Journal
10. Enter the following information for the journal entry
1. Narration “To recode July 2018 expenses to the correct account.”
(You should use the month that appears next to the last transactions
in your report.)
2. Date = “July 31, 2018”
3. Enter these lines:
▪ Debit Travel for $130.00
▪ Credit General Expenses for $130.00
4. Click Post.
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Practice Exercise #62: Archiving general ledger accounts 1. You do not want your client to use the General Expense general ledger
account when coding future transactions. You will need to archive it.
2. Settings > Chart of Accounts
3. Click the Expenses tab to show the expense accounts. Locate the 628-
General Expense account easily by using the Search tool.
4. Select the box to the left to highlight the account.
5. Select the Archive button.
6. Confirm the archive by clicking OK.
7. Click the Archive tab to show the general ledger accounts that have been
archived.
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Find and Recode
Your client informs you that the vendor Doggie Duds is actually for Contract Labor
and not Pet Walking Supplies where you had previously coded the transactions. You
will need to recode the vendor to a contract labor account. You could use a manual
journal to reclassify the transactions, but the more efficient way would be to use Find
& Recode.
Practice Exercise #63: Find & Recode
1. Advisor > Find & Recode
2. Click the Find & Recode button to begin the search function.
3. Click +Add a condition and then Contact.
4. Under Enter a contact type “Doggie Duds” and then click Search.
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5. Xero will find the transactions that include the contact specified.
6. Select the box in the heading to highlight all of the transactions.
7. Click the drop-down box next to Recode and choose Recode source transactions.
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8. Since the Contract Labor general ledger account does not exist, it will need
to be created. Under Account, click the drop-down arrow and then +Add
Account.
9. Add the general ledger account “615-Contract Labor” as an Expense
account. Click Save.
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10. Since our contact and our sales tax rates do not to be edited, click Review.
11. Confirm the recode at Xero’s prompt.
12. Review the Recode Summary provided by Xero.
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13. Run a new Income Statement to see the new Contract Labor account
included.
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Advisor Tools
Use the Assurance Dashboard and History & Notes to understand the activity posted
in your client’s organization, by major category or user.
Practice Exercise #64: Understanding the Assurance Dashboard
1. Advisor > Assurance Dashboard
2. Under User Activity, you should see your name (because you are the only
user of the Demo Co.) Hover your mouse over the blue squares to see a
visual representation of the activity on a particular day.
3. Click Invoices & Bills.
4. Xero will produce a history of invoices that have been backdated. You
would want to understand why these were backdated.
5. Click Bank Accounts.
6. Xero produces information about manually reconciled bank activity or
statement lines that have been deleted. Again, these would be items that
may warrant investigation.
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Practice Exercise #65: Viewing History & Notes Activity
1. Advisor > History & Notes Activity
2. Where the Assurance Dashboard highlights activity that may need to be
examined, History & Notes is a running list of all activity and transactions.
3. Use the criteria at the top of the screen to filter all transactions in the last
month that affected Bank Rules where you were the user.
4. You can also search for more specific transactions than the types allowed
under Items. Make sure Period covers the time period that you changed the
logo. Type “logo” into the Search bar. Xero will produce show the results
for any transaction where the logo was changed.
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Tracking Categories
Your client has decided to open two new locations for their growing business. They
have secured two small retail locations in prime areas which will be run by senior
employees. They would like their reporting for the dog walking service and retail sales
to be separated by location. The first new location has just opened this month and the
second will be opening next quarter. You have decided to use tracking categories in
Xero to accomplish the reporting desired.
Practice Exercise #66: Adding tracking categories
1. Settings > General Settings > Tracking
2. Click +Add Tracking Category
5. Add the Tracking category of “Location” and name the different locations:
i. Annunciation
ii. Uptown
iii. Mid-City
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6. Click Save.
7. Open a +New Invoice screen under Accounts > Sales and you will notice that there is now a second category for Location.
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Find and Recode
Since your client has already opened the second location, a few transactions need to
be corrected for the proper financial statement presentation between locations.
Uptown Boutique Lofts transactions should be coded to the Uptown location, while
the rest remain with the original Annunciation location. Additionally, all retail sales to
date belong to the Annunciation location. You will need to locate the items and
classify them into the correct categories.
Practice Exercise #67: Recoding transactions for location
1. Advisor > Find and Recode
2. Click Find and Recode
3. Click +Add a condition
a. In the field, choose “Contact” and “is” and “Uptown Boutique Lofts”
b. Click Search.
c. A listing of all transaction related to Uptown Boutique Lofts will appear.
You can only have two categories, but you can have 100 options within each category.
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4. Select all invoices by checking the box at the top left of the listing.
5. Click the down arrow next to the Recode button and choose Recode source transactions.
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6. An option box appears. Click +Add to reveal the two tracking categories.
Choose Location to add a location to the transaction.
7. In the location field, use the drop-down box to choose the “Uptown”
location. Click Review.
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8. Click Confirm.
Practice Exercise #68: Recoding unassigned revenue to location 1. Advisor > Find and Recode
2. Click Find and Recode.
a. Click +Add a condition.
b. In the field, choose “Contact” and “is not” and “Uptown Boutique Lofts.”
c. Click +Add a condition.
d. In the field, choose “Account” and “is” and “Dog Walking Revenue.”
e. Click Search.
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f. Click +Add a condition.
g. In the field, choose “Date” and “is betweet” and “July 1, 2018 and today.”
h. Click Search.
3. Using the steps from the previous exercise, select all the transactions and
code them to the Annunciation location.
Reporting by Tracking Category
You will need to format a new Income Statement to separate the revenues and
expenses by Location. You will need to return to your reporting menu and edit a
report. Note, this can only be accomplished on the new Income Statement option
under Reports.
Practice Exercise #69: Create an Income Statement with Tracking
columns
1. Reports > All Reports > Income Statement (New)
2. Hover over the body of the Income Statement until the word Edit appears
above the total column. Click Edit.
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3. In the header, notice the icons to add rows and columns, along with text or
schedules.
a. Click the Column icon to add a column.
b. Choose Location.
c. Notice that a new column appears to the right of the original column.
d. Add two additional Location columns for a total of 4 columns.
4. After you have added the columns, click on the heading of each. As you
click through the headings, notice that the details on the right-side change.
The first column simply displays “Date Column” with a Date Range and
Name, but the three new columns display as “Tracking Column” and
include a Location field.
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5. Clicking on each Location column, assign each column a different location
by selecting the Location field and choosing from the drop-down menu:
a. Annunciation
b. Mid-City
c. Uptown
6. Once all columns have been assigned, click Done at the top right to return
to your report.
7. Back in your Income Statement, change your date range to “This Financial
Year”. Click Update.
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a. Review the four-column report.
b. Notice that the 2018 column does not equal the total of the three
Location columns. This means that there are Unassigned transactions
that are not allocated to a Tracking Category.
Practice Exercise #70: Identify Unassigned transactions
1. Review the report expenses. Notice that the total COGS- Pet Walking
Supplies exceeds the amount within the Location columns.
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2. Hover over the body of the Income Statement until the word Edit appears
above the total column.
a. Using the column icon at the top, add an additional column.
i. Choose the location “Unassigned”.
ii. Click Done.
3. Return to your Income Statement. Notice there are many unassigned line
items. You can use this report to confirm with your client the breakdown
between locations for the revenues and costs for each location in order to
make the income statement columns correct.