Have you ever been asked to produce a report on Xero and wondered which is the right one?
The quantity and variety of reports available on Xero can make what seems like a simple task really confusing. The key to being able to select the right one is often based in your manual bookkeeping knowledge, which provides understanding of the purpose of the report and how it is likely to be used.
This article is going to look at common reports run from the nominal ledger.
A Trial Balance (TB) is simply a list of all the nominal ledger accounts, divided between debit and credit columns depending on the balance of each account. Its purpose is to check that the total debits and credits match, in other words, a reconciliation and it is used to highlight possible errors.
In manual accounting, postings errors that are caused by unequal debits and credits will be highlighted by an imbalance on the TB. However, in Xero, the software will ensure the double entry is posted correctly so this type of error doesn’t happen. Other errors, which do not unbalance the TB, are possible in both manual and computerised accounts though, such as posting to the wrong account or entering VAT-inclusive figures as VAT-exclusive. Whilst these types of errors won’t show up as an imbalance, running a TB after processing a series of transactions (eg. opening balances) and checking it, is still a good way of ensuring everything checks out before moving onto another task. This is quickly done by a preview as often there’s no need to print the report.
If you have made corrections to your accounts then the possibility of unbalancing your trial balance arises. Xero does make this quite hard though, as even if you make corrections it will not accept them unless the total debits and credits balance. Therefore a suspense account on your TB is an indication of an error and would require investigation and correction.
To create a TB click the Reports tab on the top tool bar and then select Trial Balance if it has been set as a favourite, or All Reports if not. This either generates a TB or takes you to the Reports screen where Trial Balance can be selected from the Accounting section.
Once selected a TB is automatically created for the current day as cloud based accounting software works in real-time. If you need a TB for a particular date you must change it and select update, as it is shown on the report.
Scroll to the bottom of the report to find the options for what to do with your TB ( save, print, export etc.).
Note: Xero’s TB report show two pairs of columns – the first is the activity within the month up to the date selected and the second is the Year to Date totals.
An audit trail gives a step by step record of all the transactions in a set of accounts. The audit trail is the report that shows you everything that’s happened and as a consequences not only has numerous uses but can also be huge. Every time a transaction is entered into Xero it is given a unique number, which is used to identify it in the same way that Sage does. However, unlike Sage, Xero does not have a single audit trail report. So it is vital to know what information you need and what it is going to be used for, in order to select the right report or combination of reports, to extract the details required.
If an audit trail, showing full details of all transactions, including details of receipts/payments allocated to items in customer/supplier accounts is required, then use Xero’s Journal Report. It shows all the transactions in ID order, starting with the latest entries, in double entry format, showing details of account names, debit and credit values along with who created the transaction and when.
The Journal Report is also run from the Reports screen and is in the Accounting section. Select the time period required by changing the ‘From’ and ‘To’ dates then press update. The output options are again at the bottom of the report. Journal reports may need to be saved or exported before they can be printed.
As you can see the Journal Report shows details of bank account transactions but it does not provide information of items in the bank account that have been reconciled. In order to see that, a Bank Reconciliation Summary needs to be generated. This is in the Reports screen in the Accounting section. You will need to select which bank account and date you want the report for. Once the report has been generated select the Bank Statement tab as it is three sections and this is the one that shows the required information.
Nominal Activity Reports
There are often occasions when you want to look at a nominal account in detail. This can be done by selecting Settings from the top tool bar and then Chart of Accounts from the drop down menu. Search for and/or select the nominal account required, for example Advertising & Marketing. You can see all the transactions by clicking on the balance figure.
Alternatively, you can produce a nominal activity report. Select Account Transactions for the Accounting section of the Reports screen. Search and /or select the nominal account required, specify the date range and press update.
This can be done for any nominal ledger account and shows all the transactions within the account. In order to print the report you need to export this to a different software.
There’s lots of accounting software available with lots of variation in presentation. But fundamentally they are all based on manual double entry bookkeeping principles. Thinking about what a report shows and how it is going to be used, is the best way of working out which one to produce.
Gill Myers is a self-employed accounts consultant. She has taught AAT qualifications since 2005 and written numerous articles and e-learning resources.