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Exploring Xero

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Exploring Xero

This week we will go through the ‘Advantage Tennis Coaching’ case study in Xero to understand how this platform works. Please download the case study found on the bottom of this step as you will need to use it later on.

  1. Go to Xero 30 day free trial to set up an account in Xero. Start a 30-day free trial landing page
  2. After registering an account, you will see the Xero Dashboard.

First, we will set up the company ‘Advantage Tennis Coaching’ in Xero by clicking the top left corner and then ‘Settings’ and ‘organisation details’ and add your name, a number you like and ‘Advantage Tennis Coaching’ as your Display Name and Legal/Trading name.

Organisation details
3. Organisation type is company for this exercise and click ‘save’.
4. Go back to the Dashboard, you will find your company name is changed.

Dashboard
5. Click ‘Accounting’ at the top and select ‘Chart of accounts’.

Accounting
6. A list of the available accounts will appear.

List of accounts

Looking at the accounts, please note that the accounts are ordered as follows:

  • 200 – Income
  • 300 – Cost of Goods sold
  • 400 – Other expenses
  • 500 – Tax
  • 600 – Current Assets
  • 700 – Non-current Assets
  • 800 – Current Liabilities
  • 900 – Non-current Liabilities and Equity

Also, note that some accounts have GST and others don’t – why would that be? Note that some accounts are locked i.e. cannot be used to enter information – why would that be?

7. Now we are going to create a dummy bank account.
You need to add a bank account in order to spend or receive money in XERO.

To add a bank account you will need:

  • a bank
  • an account name
  • a chart of accounts code for the account
  • a bank account number

Click on the down arrow on the right of + Add Bank Account. Add Bank Account

Enter Business Bank Account (do not use a real bank name).

  • Use Business Bank Account for the Account Name.
  • Use 090 for the Code.
  • Use 12-0102-0345678-000 for your Bank Account Number (do not use any real bank account number)

Click Save when you have entered the required details.

The way that Xero works is that it assumes that the majority of transactions will affect the bank account, therefore transactions are recorded based on ‘spend money’ or ‘receive money’, which in reality is either a debit to or a credit to the bank account. So it takes the guesswork out of that part of recording transactions for you – your job is to decide which the other account will be affected by the transaction.

Over to you

Try to follow along in your own Xero account. Have you had any difficulties? Share them with your peers below.

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