Account Types In Xero
During the conversion we will import the accounts as per the setup of the source file unless you have elected a package that allows you to change bank accounts during the conversion process or you have over 990 accounts in your chart of accounts.
It will be an internal operational decision to elect how you with to use your accounts in Xero. If you want to reconcile the account and connect bank feeds then generally the accounts should be set up as a bank, credit card or PayPal account depending on its type.
Below we provide some post conversion guidance and examples to complete the following:
- How to change a credit card to a bank account
- How to charge a bank/credit card to Asset or Liability account
- How to change a asset/liability account to a bank account/credit card.
Changing a Credit Card to a Bank Account
1. Go to the “Settings”, select “Chart Of Accounts” and search for the credit card you want to change.
2. Click on the credit card and rename both the account code and the account name by adding an “A” to the end of the lines. (Xero doesn’t allow you to use the same account code and name on two accounts so therefore we need to rename it “A” =Archive). Then press “Save”.
3. Add a new bank account, press the button “Add Bank Account”, put in the bank name, account name, account code, bsb and account number.
At this point you have one bank account and one credit card.
4. Go to the “Chart Of Accounts” and select the credit card, make a note of the YTD amount, also note if it is an negative or positive amount.
Example: A positive “YTD” balance
If the YTD balance on the credit card is $100 then go to the “Manage Account” button for the credit card and select “Transfer”. Select the day after when you had your last transaction in that account and type in $100 and press “Save”. Then the “Statement Balance” in the credit card should be $0 and we are ready to archive this account.
Example: A negative “YTD” balance.
If the “YTD” balance in the credit card is ($500) then go to “Manage Account” button for the bank account and select “Transfer”. Select the day after when you had your last transaction in the credit card and type in $500 and press “Save”. If you look at the “Statement Balance” of the credit card it is now $0 and we are now ready to archive this account.
5. The next step is to archive the credit card, so that you are left with the newly created bank account. By archiving it you will have the full audit trail and all historical reports will show the details of the archived account. To archive the account go to “Setting”, select “Chart Of Accounts” and search for the credit card. When found, tick the box on the left-hand side and press the “Archive” button. You can customise reports to merge the old credit card and the new bank account if desired.
Changing Bank Account/Credit Card to Asset or Liability
If you have a bank account/credit card that you would like to change to an asset or liability, the steps are similar to the above with some slight differences.
1. Go to the "Settings", select "Chart of Accounts" and search for the bank account/credit card you want to change.
2. Click on the bank account/credit card and rename both the account code and the account name by adding an “A” in the end of the lines. (Xero doesn’t allow you to use the same account code and name on two accounts so therefore we need to rename it “A” =Archive) Press “Save”.
3. To the new asset or liability account, press the button “Add Account”, select the account type, add the account code, the name and a description (optional). Select the default tax rate and also tick the box “Enable payments to this account”. Then press “Save”.
At this point you have one bank account/credit card and one asset or liability account.
At this point you have one bank account/credit card and one asset or liability account.
4. Go to the “Chart Of Accounts” and select the bank account/credit card, make a note of the YTD amount, also note if it is an negative or positive amount.
Example: A positive “YTD” balance
If the “YTD” balance in the bank account/credit card is positive then you will need to go to the “Manage Account” button and select “Spend Money”. In the “To” type in “transfer” as a contact, select the date after the last transaction in this account and add a reference example: “Changing bank account to being an asset account”. Then copy the reference and put it in the “Description”, add “1” as quantity, the unit price is the “YTD” balance and select the asset account, tax rate “bas excluded” and then press “Save”.
If the “YTD” balance in the bank account/credit card is positive then you will need to go to the “Manage Account” button and select “Spend Money”. In the “To” type in “transfer” as a contact, select the date after the last transaction in this account and add a reference example: “Changing bank account to being an asset account”. Then copy the reference and put it in the “Description”, add “1” as quantity, the unit price is the “YTD” balance and select the asset account, tax rate “bas excluded” and then press “Save”.
If you look at the “Statement Balance” of the bank account/credit card it is now $0 and it is fine to archive the account.
Example: A negative “YTD” balance:
If the “YTD” balance in the bank account/credit card is negative then you will need to go to the “Manage Account” button and select “Receive Money”. In the “To” I would type in “transfer” as a contact, select the date after the last transaction in this account and add a reference example: “Changing bank-account to being an asset account as it should be”. Then copy the reference and put it in the “Description”, add “1” as quantity, the unit price is the “YTD” balance and select the asset account, tax rate “bas excluded” and then make sure you press save.
If the “YTD” balance in the bank account/credit card is negative then you will need to go to the “Manage Account” button and select “Receive Money”. In the “To” I would type in “transfer” as a contact, select the date after the last transaction in this account and add a reference example: “Changing bank-account to being an asset account as it should be”. Then copy the reference and put it in the “Description”, add “1” as quantity, the unit price is the “YTD” balance and select the asset account, tax rate “bas excluded” and then make sure you press save.
If you look at the “Statement Balance” of the bank-account/credit card it is now $0 and it is fine to archive the account.
5. Our last step is to archive the bank account/credit card, so that you are left with only the asset or liability account. By archiving it you will have the full audit trail and all historical reports will show the details of the archived account. To archive the account go to “Setting”, select “Chart Of Accounts” and search for the account. When found, tick the box on the left-hand side and press the “Archive” button. You can customise reports to merge the old credit card and the new bank account if desired.
Replacing Bank Asset/Liability to Bank Account/Credit Card
If you have an asset/liability account that you want to be able to reconcile and keep up to date easily, here is the step by st3ep to change the asset/liability to a bank/credit card.
1. Go to the “Settings”, select “Chart Of Accounts” and search for your asset/liability account that you want to change.
2. Click on the asset/liability account and rename both the account code and the account name by adding an “A” in the end of the lines.(Xero doesn’t allow you to use the same account code and name on two accounts so therefore we need to rename it “A” =Archive) Press “Save”.
3. To add a bank account, press the button “Add Bank Account”. Type in “the bank name or “no matches if there is a none bank, add the account name, the account code, and either a real or made up BSB and account number and press save. At this point you have one bank account and one asset or liability account all depending on what you are creating.
4. Go to the “Chart Of Accounts” and select the asset/liability account, make a note of the YTD amount, also note if it is an negative or positive amount.
Example: Clearing a Positive Balance
When you have a positive “YTD” balance in the asset and a negative balance in the liability account then follow this process:
Go to the “Manage Account” button of the newly created bank-account and select “Receive Money”. In the “To” type in “Transfer” as a contact, select the date after the last transaction in the asset/liability account and add a reference example: “Changing bank-account to being a asset/liability account”. Then copy the reference and put it in the “Description”, add “1” as quantity, the unit price is the “YTD” balance amount and select the asset/liability account, tax rate “bas excluded” and then make sure you press “Save”.
If you look at the “Statement Balance” of asset/liability account it is now $0 and it is fine to archive the account. By archiving it you have the full audit trail and we can view when it was changed etc. Archive the account by going to “Setting”, select “Chart Of Account” and search for the asset/liability account. When found, tick the box on the left-hand side and press the “Archive” button.
Example: Clearing a Negative Balance
When you have a negative “YTD” balance in the asset account and a positive balance on the liability account then follow this process:
Go to the “Manage Account” button of the newly created bank-account and select “Spend Money”. In the “To” type in “Transfer” as a contact, select the date after the last transaction in the asset/liability account and add a reference example: “Changing bank-account to being a asset/liability account”. Then copy the reference and put it in the “Description”, add “1” as quantity, the unit price is the “YTD” balance amount and select the asset/liability account, tax rate “bas excluded” and then make sure you press “Save”.
Go to the “Manage Account” button of the newly created bank-account and select “Spend Money”. In the “To” type in “Transfer” as a contact, select the date after the last transaction in the asset/liability account and add a reference example: “Changing bank-account to being a asset/liability account”. Then copy the reference and put it in the “Description”, add “1” as quantity, the unit price is the “YTD” balance amount and select the asset/liability account, tax rate “bas excluded” and then make sure you press “Save”.
If you look at the “Statement Balance” of the asset/liability account it is now $0 and it is fine to archive the account. By archiving it you have the full audit trail and we can view when it was changed etc. Archive the account by going to “Settings”, select “Chart Of Accounts” and search for the asset/liability account. When found, tick the box on the left-hand side and press the “Archive” button.
Positive “YTD” Balances
| Source | Result | |||
| Bank Account | Credit Card | Asset Account | Liability Account | |
| Bank Account |  | Transfer from Bank Account | Spend money | Spend money |
| Credit Card | Transfer from Credit Card | | Spend money | Spend money |
| Asset Account | Spend money | Spend money | | Manual journal |
| Liability Account | Receive money | Receive money | Manual journal | |
Negative “YTD” Balances
| Source | Result | |||
| Bank Account | Credit Card | Asset Account | Liability Account | |
| Bank Account | | Transfer from Credit Card | Receive money | Receive money |
| Credit Card | Transfer from Bank Account | | Receive money | Receive money |
| Asset Account | Receive money | Receive money | | Manual journal |
| Liability Account | Spend money | Spend money | Manual journal | |
Conclusion
It's suggested that you review your chart of accounts when changing systems and determine how to best use the new platform moving forward. If you are unsure about anything, contact your accountant for support and advice. Once this is set up ideally for your company, you will find that your Xero journey will be fun and run smoothly!
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