Before You Start

This guide assumes your December month-end close is complete and you have access to all necessary Xero reports.

Overview

25 min
Estimated Time
Intermediate
Difficulty
Annual
Frequency

What You’ll Learn

  • Running essential year-end financial reports in Xero
  • Reviewing and adjusting fixed assets and depreciation
  • Making final accrual and deferred journal entries
  • Preparing your Xero file and reports for your CPA or tax preparer

1. Preparation Steps

Ensure these essential reports are ready for review:

Required Reports

  • Profit and Loss Statement (Accrual Basis)
  • Balance Sheet (Accrual Basis)
  • General Ledger Detail (for the full fiscal year)
  • Trial Balance

Optional (but recommended)

  • Fixed Asset Register
  • Accounts Receivable Aging Summary
  • Accounts Payable Aging Summary

2. Key Year-End Adjustments

You’ll need to decide between simply reviewing existing data or making additional adjustments.

Option A: Reviewing Existing Data

This involves checking your current entries for accuracy and completeness.

Pros:
  • Identifies discrepancies early.
  • Validates existing entries.
  • Minimizes complex adjustments.
Cons:
  • Can be time-consuming.
  • Requires detailed understanding.
  • May miss GAAP requirements.

Option B: Making Journal Entry Adjustments

This ensures your books comply with accounting standards for tax purposes.

Expert Tip: For significant adjustments like complex accruals or deferred revenue, it’s always best to consult with your CPA or a qualified bookkeeper.

3. Running Essential Reports

Before making any final adjustments, run your initial reports.

Here is a sample code block to show how an API call might look.

{
  "report_type": "Profit and Loss",
  "period": "Fiscal Year 2024",
  "basis": "Accrual",
  "parameters": {
    "tracking_categories": []
  }
}

4. Step-by-Step: Year-End Checklist

  1. 1

    Reconcile All Bank Accounts

    Ensure all bank accounts are fully reconciled up to the last day of the fiscal year.

  2. 2

    Review Accounts Receivable/Payable

    Clean up any old or uncollectible invoices and outstanding bills. Write off bad debts if necessary.

  3. 3

    Validate Fixed Asset Register

    Update the Fixed Asset Register for new purchases, disposals, and calculate annual depreciation.

  4. 4

    Process Accruals and Deferrals

    Record any unbilled expenses (accruals) or prepaid income/expenses (deferrals) with journal entries.

  5. 5

    Run Final Reports

    Generate your final Profit and Loss, Balance Sheet, and Trial Balance reports after all adjustments.

Common Error: Incorrect Fixed Asset Handling

Incorrectly categorizing fixed asset additions or disposals can lead to significant tax discrepancies. Always confirm with your CPA.

5. Preparing for Your CPA

CPA Package Checklist

  • Provide your CPA with appropriate access to your Xero account
  • Export Final P&L and Balance Sheet (PDF format)
  • Export General Ledger Detail (CSV or Excel format)
  • Share the Fixed Asset Register
  • Prepare a summary of significant or unusual transactions

Need Help?

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