Financial Accounting
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XeroAssessment.pdf
Xero Accounting Software Assessment
2 Kaplan Business School
Contents
ASSESSMENT INFORMATION 3
What is Xero? 3
Quick Start Guide 3
Assessment Documents 3
PRACTICE SET 4
Reports Required 4
List of Transactions 5
Bank Reconciliation 14
APPENDIX 1 – VIDEO MANUALS 16
APPENDIX 2 – SETTINGS 17
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Assessment Information
What is Xero?
Xero is online accounting software designed for small to medium businesses. As a subscription-based service, Xero
is 100% cloud-based, and all transactions happen in real-time, ensuring that you have the most up-to-date financial
information at your fingertips.
Quick Start Guide What you will need
access to the internet
MS Excel, or other spreadsheet editing software
an email address
One of the following internet browsers - Google Chrome (PC and Mac); Internet Explorer (IE) 11 (PC);
Mozilla Firefox (PC and Mac); Safari 8 (Mac)
Assessment Documents 1. You will require the following documents to begin the assessment
Appendix 1 - Video Manuals
Appendix 2 - Settings
Practice Set
Bank Statements of May 2019
Chart of Accounts
2. The video manuals in Appendix 1 will introduce you to the Xero accounting software, help you with the
Xero navigation, help desk and some sample transactions (highlighted in colour blue in practice set along
with the video references). It is highly recommended to watch the videos and note the necessary steps and
tips advised by the Xero educator.
3. You will be required to process the transactions in Practice Set using your accounting concepts learnt in
the respective subject and generate financial reports.
4. By the end of this practice set, you will have obtained real-world experience in using Xero.
Good Luck!
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Practice Set Max Supplies is a new start-up, sole-trader B2B organisation, offering an extensive range of office supplies including
tech-products, books and printing services, located in the South Melbourne, Australia. During the business setup
procedures in May 2019, they have registered for GST. All the transactions are in Australian Dollars.
You have been hired as a Junior Accountant to set up and record Max Supplies business transactions for the month
of May 2019 and then at the end, generate financial reports to complete a one-month accounting cycle. You should
be able to perform many activities in the Max Supplies business that are commonly performed by professional
accountants.
Reports Required Accounts Transactions Report for the month of May 2019
Profit and Loss Statement for the month ended 31 May 2019
Balance Sheet as at 31 May 2019
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List of Transactions
You are required to first set up the organisation settings, financial settings, bank accounts, contacts, chart of
accounts, tax details and other relevant information using the data given in Appendix 2 of the document. (In
Appendix 1, please refer to the video 1, 2, 3 and 4)
1 May Hired a contractual staff on a weekly wage of $1,000 for the month of June 2019.
Also, negotiated a deal with supplier ABC Furniture worth $800 related to the office shelves.
1 May
The owner introduced $15,000 as owners’ equity into the business.
Tip: You can add Owner Equity in the Manual Journal (New Manual Journal under Manual Journal)
or use a “Create” tool in the Bank Reconciliation at the end of the month.
2 May
Set up Fixed Assets and Depreciation settings.
Register the cash purchase of Glass Display Unit worth $3,000 from Universal Furniture via Fixed
Assets option (Asset Number FA-0001).
(Please refer to video 5 – Fixed Assets & Manual Journals)
Field Information
Start Date 1 July 2018
Asset Type Office Equipment
Asset Account 710 – Office Equipment
Accumulated Depreciation 711 – Less Accumulated Depreciation Office Equipment
Depreciation Expense A/C 416 – Depreciation
Depreciation Method Straight Line Method
Averaging Method Actual Days
Rate 20%
Tax Depreciation Default No Depreciation
2 May
Register the cash purchase of worth $3,500 for Office Equipment from ABC Furniture. Payment
was made via an online transfer to the ABC Furniture.
Field Information
Asset Type Office Equipment
Asset Account 710 – Office Equipment
Accumulated Depreciation 711 – Less Accumulated Depreciation Office Equipment
Depreciation Expense A/C 416 – Depreciation
Depreciation Method Straight Line Method
Averaging Method Actual Days
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Rate 20%
Tax Depreciation Default No Depreciation
3 May
Set up Fixed Assets and Depreciation settings.
Register the cash purchase of Computer Equipment worth $1,000 from Computer & Technology
Group via Fixed Assets option.
Field Information
Asset Type Computer Equipment
Asset Account 720 - Computer Equipment
Accumulated Depreciation 721 - Less Accumulated Depreciation Computer Equipment
Depreciation Expense A/C 416 – Depreciation
Depreciation Method Straight Line Method
Averaging Method Actual Days
Rate 25%
Tax Depreciation Default No Depreciation
4 May
Set approved repeating bills from Pinnacle Management.
(Please refer to video 6 – Bills & Invoices)
Field Information
Repeat this transaction every Enter 1 and select Month(s)
Bill Date 1 May 2019
Due Date Enter 1 – day(s) after the bill date
End Date 30 November 2019
Tax Rate Drop Down Menu (on right
side above the description box)
Tax Inclusive
Description Monthly rent for the South Melbourne store
Qty | Unit Price 1 | $4,000
Account 469 - Rent
Tax Rate GST on Expenses
Amount Automatically populated as $4,000
5 May Purchased 150 Essential Office Supplies from “Bulk Buys” on credit with the payment due date of
29 June 2019 (refer to Item Code 2 in Appendix 1).
6 May Purchased 150 books of “Basics of Accounting” with a unit price of $20 from “Low-Plex Wholesale
Bookstore” paid via online transfer. The unit selling price is $50.
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6 May
Sold 30 Essential Office Supplies (Item Code 2) and 40 books of “Basics of Accounting” with a unit
price of $50 on credit to Sirius Business Solutions. Both the items will be invoiced together. Due
date of the sales payment was 5 June 2019.
(Please refer to video 6 – Bills & Invoices)
7 May Sold 20 Essential Office Supplies (Item Code 2) to Techno World on credit terms with a due date
of 15 June 2019. The contact details of the Techno World are 02 8650 8453.
8 May Successfully negotiated a Bank Loan of $7,000 from National Australian Bank (NAB). The contract
will be processed by 02 June 2019 will and funds will be available on 04 June 2019.
10 May
Set approve repeating bills from Bulk Buys.
Do not set Office Stationery as a “New item or tacked item”
Field Information
Repeat this transaction every Enter 1 and select Month(s)
Bill Date 10 May 2019
Due Date Enter 3 - day(s) after the bill date
End Date 31 December 2019
Description Office Stationery
Qty | Unit Price 100 | $5
Account 310 – Costs of Goods Sold
Tax Rate GST on Expenses
11 May
Set approve repeating invoices to Sirius Business School.
Do not set Office Stationery as a “New item or tacked item”
Field Information
Repeat this transaction every Enter 1 and select Month(s)
Bill Date 11 May 2019
Due Date Enter 30 – day(s) after the invoice date
End Date 31 December 2019
Description Office Stationery
Qty | Unit Price 50 | $10
Account 200 – Sales
Tax Rate GST on Income
12 May Sold 20 books of “Basics of Accounting” to South Grammar School with a unit price of $50 to be
paid via online transfer on 10 June 2019.
13 May Record repeating prepaid Insurance via Manual Journal.
(Please refer to video 5 – Fixed Assets & Manual Journals)
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Field Information
First Journal Date 13 May 2019
Repeat this journal every 1 Month(s) – The journal will repeat monthly
End date 30 June 2020
Save as Draft or Post Select Post option
Narration Recognise prepaid monthly insurance expense
Default Narration to Journal line
description
Ticked
Show Journal on cash basis
report
Ticked
Amounts are Tax Inclusive
Line 1 Automatically populated with narration (as per tick box)
Account 433 – Insurance
Tax rate GST on Expenses
Debit AUD $120
Credit Leave Blank
Line 2 Automatically populated with narration (as per tick box)
Account 620 – Prepayments
Tax rate BAS Excluded
Debit AUD Leave Blank
Credit $120
14 May
Record repeating prepaid Telephone & Internet via Manual Journal
Field Information
First Journal Date 14 May 2019
Repeat this journal every 1 Month(s) – The journal will repeat monthly
End date 30 June 2020
Save as Draft or Post Select Post option
Narration Recognise prepaid monthly Telephone & Internet expense
Default Narration to Journal line
description
Ticked
Show Journal on cash basis
report
Ticked
Amounts are Tax Inclusive
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Line 1 Automatically populated with narration (as per tick box)
Account 489 – Telephone & Internet
Tax rate GST on Expenses
Debit AUD $90
Credit Leave Blank
Line 2 Automatically populated with narration (as per tick box)
Account 620 – Prepayments
Tax rate BAS Excluded
Debit AUD Leave Blank
Credit $90
14 May
Record repeating accrued Electricity via Manual Journal
Field Information
First Journal Date 14 May 2019
Repeat this journal every 3 Month(s) – The journal will repeat quarterly
End date 30 June 2020
Save as Draft or Post Select Post option
Narration Recognise quarterly accrued electricity expense
Default Narration to Journal line
description
Ticked
Show Journal on cash basis
report
Ticked
Amounts are Tax Inclusive
Line 1 Automatically populated with narration (as per tick box)
Account 445 – Light, Power and Heating
Tax rate GST on Expenses
Debit AUD $100
Credit Leave Blank
Line 2 Automatically populated with narration (as per tick box)
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Account 815 - Accrued Expenses
Add Accrued Expenses Separately from the drop-down
menu option in the tab “Account”
Field Information
Account Type Recall your concepts – what type of
account is Accrued Expenses?
Code 815
Name Accrued Expenses
Tax BAS Excluded
Description The amount of any balance day
adjustments for expenses
Leave Unticked Dashboard watchlist, expense claims,
enable payments
Tax rate BAS Excluded
Debit AUD Leave Blank
Credit $100
15 May
Record repeating accrued Freight & Courier via Manual Journal
Field Information
First Journal Date 15 May 2019
Repeat this journal every 1 Month(s) – The journal will repeat monthly
End date 30 June 2020
Save as Draft or Post Select Post option
Narration Recognise monthly accrued Freight expense
Default Narration to Journal line
description
Ticked
Show Journal on cash basis
report
Ticked
Amounts are Tax Inclusive
Line 1 Automatically populated with narration (as per tick box)
Account 425 – Freight & Courier
Tax rate GST on Expenses
Debit AUD $110
Credit Leave Blank
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Line 2 Automatically populated with narration (as per tick box)
Account 815 - Accrued Expenses
Tax rate BAS Excluded
Debit AUD Leave Blank
Credit $110
15 May
Record repeating prepaid subscriptions via Manual Journal
Field Information
First Journal Date 15 May 2019
Repeat this journal every 1 Month(s) – The journal will repeat monthly
End date 30 June 2020
Save as Draft or Post Select Post option
Narration Recognise prepaid monthly subscriptions expense
Default Narration to Journal line
description
Ticked
Show Journal on cash basis
report
Ticked
Amounts are Tax Inclusive
Line 1 Automatically populated with narration (as per tick box)
Account 485 - Subscriptions
Tax rate GST on Expenses
Debit AUD $100
Credit Leave Blank
Line 2 Automatically populated with narration (as per tick box)
Account 620 - Prepayments
Tax rate BAS Excluded
Debit AUD Leave Blank
Credit $100
16 May Purchased 60 “Advanced Accounting” books from Simon Book Wholesaler on credit for $20. The
payment due date is 5 June 2019. The unit selling price is $50.
17 May Sold 25 books of “Basics of Accounting” to South Grammar School with a unit price of $50 on
credit. Due Date is 15 June 2019.
18 May Sold 5 sets of “Essential Office Supplies” to the Flood Slice Consultants on credit terms of 2/10,
net 20. Flood Slice Consultant made the payment on 22nd of the following month.
18 May Paid general expenses of $200 to Bernard Hills Agency.
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19 May Paid cleaning expenses of $220 to Cleaning Fox Ltd.
19 May Sold 20 books of “Advanced Accounting” with a unit price of $ 50 to Murad College with a due
date of 10 June 2019.
20 May
Sold 15 books of “Advanced Accounting” with a unit price of $ 50 to Georgia College, offering 20%
off in their next purchase if payment was made within 10 days from the date of the purchase.
Received an online transfer from Georgia College on 2 June 2019.
21 May
Approved and delivered an order for 40 “Basics of Accounting” from “Caulfield College of Business
Studies” with a unit price of $50 on credit. The payment due date was 12 business days from the
date of purchase.
22 May Paid $150 for Printing and Stationery to Officeworks.
22 May
Sold 20 sets of “Essential Office Supplies” Item Code 2 to the Techno World on credit terms of
2/10, net 20. To avail the discount, the customer decided to make payments in the first week of
the following month on 4 June 2019.
23 May
Successfully negotiated a contract to supply 25 “Essential Office Supplies” to the Campbellfield
University of Science & Technology. The delivery and settlement agreement will be decided on 03
June 2019.
24 May
Set approved repeating bills to MaxArts.
Do not set Arts & Crafts Paint Set as a tracked item.
Field Information
Repeat this transaction every Enter 1 and select Month(s)
Bill Date 24 May 2019
Due Date Enter 15 – day(s) after the bill date
End Date 20 December 2019
Description Arts & Crafts Paint Set
Qty | Unit Price 130 | $14
Selling Price $50
Account 310 – Costs of Goods Sold
Tax Rate GST on Expenses
27 May
Set approved repeating invoices to Hutchinson College of Arts & Crafts.
Field Information
Repeat this transaction every Enter 1 and select Month(s)
Invoice Date 27 May 2019
Due Date Enter 10 – day(s) after the invoice date
End Date 31 December 2019
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Description Arts & Crafts Paint Set
Qty | Unit Price 100 | $50
Account 200 – Sales
Tax Rate GST on Income
27 May Paid $120 for Motor Vehicle expenses to Holden Dennis.
28 May Office expenses of $1070 was paid to South Melbourne Agency via an online transfer.
29 May Advertising expenses of $300 was paid to Sam Media Group.
30 May Sold 5 books of “Advanced Accounting” at a normal sales price to Murad College with a due date
of 15 June 2019.
31 May Consulting and Accounting expenses of $100 was paid to Aly Tax Accountants.
31 May Wages and Salaries of $1250 for the month of May was paid to HR Specialists.
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Bank Reconciliation
May 31
(refer
video 7)
Complete the provided Bank Statement template for the month of May 2019. In Bank Statement,
the credit figure is reflected as (-) or within (brackets). Do not change the basic settings or format
originally provided in the .csv file.
Once you have reflected the transactions’ dual entry system impact on the bank, you have to
import it.
Starting on the Dashboard or Business Bank Account page > click on the Manage Account
Reconcile column in the pop-up menu > select Import a Statement > Click on the Browse button
> Open the .csv file > Click on Import.
Following the import of bank statement, you will be required to perform bank Reconciliation
which has four options.
Match - This tab allows you to search for invoices and bills that have already been
entered. Xero will suggest a match if it finds a transaction that fits the criteria on the
bank transaction.
In the Bank Reconciliation screen, on the right (general ledger side) you will see a
number of transactions that are highlighted in green. This means an existing invoice or
a bill, has been suggested as a match for the banking transaction.
In this case, the bank transaction matches an invoice that Xero has suggested. To
complete the reconciliation of this transaction, click the ‘OK’ button.
However, there may be a note underneath the match details: ‘x Other Possible Match
Found’. This note will only be present if the repeating invoice or bills that you created
has already created 2 or more transactions.
If this is present, click the ‘1 Other Possible Match Found’ link. For example, if you have
more than one invoice present for ABC Furniture, pick the invoice with the date closest
to the bank transaction date. Select the correct invoice, and if the transaction total
matches the invoice total, a reconcile button will be present. Click ‘Reconcile’.
This note will only be present if the repeating invoice/bill that you created has already
created 2 or more transactions
You will be able to click into the individual invoices to investigate further and decide if
they match the bank transaction. If you have more than one invoice present for ABC
Furniture, pick the invoice with the date closest to the bank transaction date. 5. Select
the correct invoice, and if the transaction total matches the invoice total, a reconcile
button will be present. Click ‘Reconcile’.
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Create - Click on the ‘Create’ tab on the right-hand side and following details and click
“OK”
Field Information
Who The Point
What 420 - Staff Entertainment
Why Staff Lunch
Tax Rate GST Free Expense
Tip: Reconcile Owners Funds, Bank Charges and Karl Legal Associates (Legal and
Consulting Fees) by creating the relevant accounts under Bank Reconciliation, reconcile
tool.
Transfer - If you have moved money from one business bank account to another, you
can account for this transaction by using the ‘Transfer’ tab.
Note: There are no transactions related to transfer tab in Max Supplies.
Discuss - If further investigation is needed, or another staff member needs to provide
more information about a transaction, you can use the ‘Discuss’ function. This will
allow the user to leave a note attached to the transaction.
Note: There are no transactions related to transfer tab in Max Supplies.
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Appendix 1 – Video Manuals
Video Content 1. Introduction to Xero
2. Organisation & Financial Settings
3. Conversion Balances , Users, Tax
4. Bank, Contact & Inventory Settings
5. Fixed Assets & Manual Journals
6. Bills and Invoices
7. Bank Reconciliation
8. Reporting
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Appendix 2 – Settings
Begin your real-life experience of learning accounting software by Logging in to Xero simply by clicking on to the
link emailed to you by your course instructor.
Once you have clicked on to the link, set a password and two-steps authentication.
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Note: Do not set up the organisation by yourself. Instead, try the Demo Company to get familiarise with the
system.
Organisation Settings
Field Information
Display Name Max Supplies
Legal/Trading Name Max Supplies
Line of business Wholesale Office Supplies
Organisation Type Sole Trader
ABN 84111122223
Organisation Description Extensive range of stationery, office supplies, technology, furniture
products, books and printing services
Postal Address
Physical Address
380 Bank Street, South Melbourne, VIC, 3205
Please do not use “Quick Find” – This function searches White pages for
entry. Designed to save you time filling out an address
Telephone 03 3831 12345
Email [email protected]
Website www.maxsupplies.com
Twitter @maxsupplies
Financial Settings
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Financial Year End 30 June
GST Accounting Method Cash Basis - Australian businesses that are registered to report Goods and
Services Tax (GST) obligations to the Australian Tax Office (ATO) are required
to complete a Business Activity Statement (BAS) that will outline the tax
obligations for the reporting period. There are various methods of
calculating and completing your BAS. Max Supplies operate on a cash basis.
Tax File Number 123456
GST Calculation Quarterly
PAYG Withheld Period None
PAYG Income Tax Method None
Tax Defaults Tax Exclusive for Sales | Tax Inclusive for Purchases
Lock Dates Do not set any Lock dates
Lock dates stop data from being changed for a specific period. You can
change these at any time.
Time Zone Canberra, Melbourne, Sydney
Conversion Balances
Conversion Date April 2019
Users
Users Advisor
Tax Rates
Tax Rates Advanced Tax rates
Each account in your Chart of Accounts must have a default tax rate
specified. When an account is used in a transaction, such as an invoice or
journal entry, the default tax rate will be automatically populated when the
account is selected. The tax rate can also be changed at the time of the
transaction, using a drop-down list.
Bank Settings – National Australia Bank NAB (AU)
Account Name Business Bank Account
Account Type Every day (day-to-day)
Account Number (BSB) 123456
Account Number 123456
Leave “I have set up batch payments unticked)
Account Name Business Savings Account
Account Type Every day (day-to-day)
Account Number (BSB) 123456
Account Number 7891011
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Contacts
Field Information
Contact Name Sirius Business Solution
Primary Person Evan Bryers
Email [email protected]
Phone 61 03 237 3372
Website www.siriusbusiness.com.au
Find address (leave blank)
Postal address 7 Swanston Street, Melbourne, VIC, 3000, Australia
Please do not use “Quick Find” – This function searches White pages for
entry. Designed to save you time filling out an address
Street Address Same as above
ABN 98111133334
Default sales GST GST on Income
Default purchases GST GST on Expenses
Contact Name ABC Furniture
Primary Person Trish Rawlings
Email [email protected]
Phone 0800124578
Contact Name Techno World
Primary Person Bob Partridge
Email [email protected]
Phone 02 2024455
Skype technoworld8759
Find Address Leave blank
Postal Address Secretary Techno World, P O Box 3342, South Mailing Centre, Ridge
Heights, Madeupville, MVL 6001, Australia.
Postal address Secretary Techno World, 148 Bay Harbour Road, Ridge Heights,
Madeupville, MVL 6001, Australia.
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Import a Chart of Accounts or Use
default
Now it’s time to import a chart of accounts into Xero by using a
ChartOfAccounts.csv template file provided.
Or
The Blank Slate Ltd has its own default Chart of Accounts which can be
used too.
This is an efficient method for creating, and also updating a chart of
accounts. If you need to make a lot of changes in bulk, the recommended
approach is to edit the chart of accounts with spreadsheet editing software
(e.g. MS Excel), using the Xero chart of accounts template and then
importing the completed template into your organisation.
Inventory
Inventory can be set up under the menu of Business > “Products and Services” in the pop-up menu”
Item Code 2
Item Name Essential Office Supplies
I track this item Ticked
Inventory Asset Account 630 - Inventory
I purchase this item Ticked (default)
Purchase Unit Price 200
Cost of Goods Sold Account 310- Cost of Goods Sold
Purchase Tax Rate GST On Expenses
Purchase Description Essential Office Supplies
I sell this item Ticked (Default)
Sales Unit Price 400
Sales Account 200 - Sales
Sales Tax Rate GST on Income
Sales Description Essential Office Supplies
