Xero
Error 1
Description: The inventory was not adjusted to show inventory sold and hence there is no
cost of goods sold (COGS) in the income statement.
Likely cause of Error: The likely cause of the error is that when the inventory item/s
were created under ‘Products and services’ the “Track inventory item” box was not ticked.
How to fix the Error: To fix the error, the easiest way is to do a manual adjustment for
the period to get the level of inventory and COGS to the correct amount. Then to prevent this
issue in the future, click on ‘Products and services’ click on the inventory item, click ‘edit
item’, click the “Track inventory item” box and click ‘Save’.
Error 2
Description: The Accounts Payable balance is overstated by $200
Likely cause of Error: This is due to a unresolved supplier transaction, either not
applied a discount or credit note to write off the remainder or the accountant may have not
recorded a payment of $200 cash and now cash is also overstated by $200
How to fix the Error: First go to ‘Aged Payables Summary’ locate the error and
determine whether it was a missed discount or outstanding debt that has been paid. If the
error was a discount that wasn’t applied, go to ‘Business’ then ‘Purchases’ then ‘New Credit
note’ and create a credit note for the respective remaining $200. If the error was a payment
that wasn’t recorded, go to "Bill” then ‘Add payment’ and add the payment of $200 to the
correct Bill. To verify the fix, run the balance sheet and ensure the accounts payable is at
$1440.
Error 3
Description: The staff Coffee Machine is not shown in the balance sheet as an asset.
Likely cause of Error: The cause is that they neglected transferring the coffee
machine from inventory to a fixed asset in Xero.
How to fix the Error: To fix this, first remove the item from inventory by going to
‘Business’ then ‘Products and services’ and then click “New Adjustment” fill out the
adjustment by selecting ‘decrease quantity’ and decrease it by 1. Second, go to ‘Accounting’
then ‘Fixed assets’ and click “New asset”, add the coffee machine with its correct
depreciation method. Note that Xero will automatically calculate depreciation so the manual
journal entry for the accumulated depreciation can be deleted.
Error 4
Description: The Discount received is a line item on the statement of profit & loss under
gross profit when it should be in other income.
Likely cause of Error: The error likely occurred because the ‘discount’ field was used
when paying for a bill, and hence it would have been subtracted from COGS, but instead, it
was treated as a revenue due to the previous error resulting in there being no COGS.
How to fix the Error: Go to ‘Accounting’ then ‘Chart of Accounts’, if the Discount
Received account exists click on it, if not click “Add Account” and create the account, then
select the ‘Account type’ to be ‘other income’ and save. Then, go to the correct bill and
remove the $130.80 discount and instead create a $130.80 credit note under the account
just made.
Error 1
Description: The inventory was not adjusted to show inventory sold and hence there is no
cost of goods sold (COGS) in the income statement.
Likely cause of Error: The likely cause of the error is that when the inventory item/s
were created under ‘Products and services’ the “Track inventory item” box was not ticked.
How to fix the Error: To fix the error, the easiest way is to do a manual adjustment for
the period to get the level of inventory and COGS to the correct amount. Then to prevent this
issue in the future, click on ‘Products and services’ click on the inventory item, click ‘edit
item’, click the “Track inventory item” box and click ‘Save’.
Error 2
Description: The Accounts Payable balance is overstated by $200
Likely cause of Error: This is due to a unresolved supplier transaction, either not
applied a discount or credit note to write off the remainder or the accountant may have not
recorded a payment of $200 cash and now cash is also overstated by $200
How to fix the Error: First go to ‘Aged Payables Summary’ locate the error and
determine whether it was a missed discount or outstanding debt that has been paid. If the
error was a discount that wasn’t applied, go to ‘Business’ then ‘Purchases’ then ‘New Credit
note’ and create a credit note for the respective remaining $200. If the error was a payment
that wasn’t recorded, go to "Bill” then ‘Add payment’ and add the payment of $200 to the
correct Bill. To verify the fix, run the balance sheet and ensure the accounts payable is at
$1440.
Error 3
Description: The staff Coffee Machine is not shown in the balance sheet as an asset.
Likely cause of Error: The cause is that they neglected transferring the coffee
machine from inventory to a fixed asset in Xero.
How to fix the Error: To fix this, first remove the item from inventory by going to
‘Business’ then ‘Products and services’ and then click “New Adjustment” fill out the
adjustment by selecting ‘decrease quantity’ and decrease it by 1. Second, go to ‘Accounting’
then ‘Fixed assets’ and click “New asset”, add the coffee machine with its correct
depreciation method. Note that Xero will automatically calculate depreciation so the manual
journal entry for the accumulated depreciation can be deleted.
Error 4
Description: The Discount received is a line item on the statement of profit & loss under
gross profit when it should be in other income.
Likely cause of Error: The error likely occurred because the ‘discount’ field was used
when paying for a bill, and hence it would have been subtracted from COGS, but instead, it
was treated as a revenue due to the previous error resulting in there being no COGS.
How to fix the Error: Go to ‘Accounting’ then ‘Chart of Accounts’, if the Discount
Received account exists click on it, if not click “Add Account” and create the account, then
select the ‘Account type’ to be ‘other income’ and save. Then, go to the correct bill and
remove the $130.80 discount and instead create a $130.80 credit note under the account
just made.
