Set up a trial balance

Modified on Wed, 01 May 2024 at 10:35 AM


Once you add or import a trial balance, you should complete the following actions (if relevant):

  • Assign the accounts to the balance sheet and income statement, so the system can start the tax calculation.
  • Assign the accounts to the tax balances, i.e. current tax, deferred tax, current tax expense and deferred tax expense.
  • Assign the accounts to the relevant IR10 categories.
  • Exclude an account from profit before tax (PBT).

You only need to assign the accounts in the first tax year, as the system will remember the assignment in the following years.

Assign Accounts to the Balance Sheet and Income Statement

If you imported a trial balance from Xero for the first time (ie, in year 1) and selected the Import Reporting Codes option, you do NOT need to do this task, as the system automatically assigns the accounts for you. From year 2 onwards, you will need to assign any new accounts using the steps below.

  1. On the Trial balance page > All accounts tab, select the check boxes of all the balance sheet accounts.

    Tip: You can select multiple accounts at the same time – after selecting the first account in the list, hold the Shift key and click the last account in the list.

  2. Select Balance Sheet from the drop-down list and click the Apply button.
  3. Select the check boxes of all the income statement accounts.
  4. Select Income Statement from the drop-down list and click the Apply button.

  5. Click the Unassigned tab to see if there are any remaining unassigned accounts and if there are, assign them to the balance sheet or income statement as applicable.

If you assigned an account incorrectly, you can re-assign it. Click the Settings buttonfor the account and click Balance Sheet or Income Statement as applicable.

Assign Accounts to the Tax Balances

Assigning the relevant accounts to the tax balances is important for the tax provision calculation. See Tax Account Movements.

  1. On the Trial balance page, locate the accounts you want to assign to a tax balance.
  2. Click the Settings button of the account, then click the relevant option: Current Tax, Deferred Tax, Current Tax Expense or Deferred Tax Expense.

Assign Accounts to the IR10 Categories

If you intend to file an IR10, you need to assign the accounts to the IR10 categories. Once assigned, you can see the accounts in the tax return, on the Financial Statements Summary (IR10) tab.

  1. On the Trial balance page, click the IR10 tab.
  2. To assign an individual account, click the Settings buttonthen click the relevant IR10 category.
  3. To assign multiple accounts at the same time, select the check boxes of the accounts, select the relevant category from the drop-down list at the top of the accounts and click Apply.

If you cannot see an IR10, ensure the Financial Statements Summary (IR10) setting is turned on. Within the entity’s Income tax return, click the Settings tab > Settings. Then in the Return Settings section > Financial Statements Summary (IR10) option, ensure Yes is selected.

Exclude an Account from the Profit Before Tax (PBT)

If the trial balance contains an account that is ‘after tax’ rather than ‘before tax’, such as the tax expense or dividend paid account, you will want to exclude this from the system’s profit before tax calculation.

  1. On the Trial balance page, click the Income statement tab.
  2. Locate the account you want to exclude from the PBT.
  3. In the Workpapers column, click Add workpaper > Exclude from PBT.

Prepare Financial Statements Report

To create a Financial Statements report at the entity level, follow the steps below once you have imported the trial balance.

Under Workpapers > Accounts, on the Income statement and Balance sheet tabs, use the Financial statement category icon to assign the relevant category.

To view the Financial statements report, click Reports > Balance Sheet/Income statement

The statements can be exported to Excel using the Export button.

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