Xero Account Classification

Report Craft decides which section of a report an account prints in from what Xero says about that account. Xero gives each account three signals, and Report Craft reads them in order:

1. Reporting code - Xero's own report mapping, and the most specific thing it knows about an account. This is what Report Craft prefers.

2. Account type - used when an account has no reporting code.

3. Account class - the broad accounting class, used as a last resort.

A distribution out of profit - a share of profit allocated to an owner, beneficiary or partner, drawings taken during the year, or a dividend paid - is normally an Equity account in Xero. Xero has no account type called Distribution or Appropriation, so those accounts cannot be told apart from share capital or reserves by their type alone.

The reporting code is what tells them apart. Report Craft treats the equity reporting codes that mean a profit allocation, drawings or a dividend paid as appropriation items and shows them in the Appropriation report. Every other equity code stays in the ordinary Equity section of the Balance Sheet.

A trust has an account for a beneficiary's share of the year's profit. In Xero it is an Equity account, and that is where it should stay. Left alone, Report Craft prints it on the Balance Sheet beside share capital and reserves - which is not where a distribution out of profit belongs.

Give that account the report code EQU.PFT in Xero - Xero's code for a profit distribution - and it moves. Report codes are set against a client's chart of accounts from your practice tools in Xero rather than on the account in the client's own ledger, so it is not something the client changes by accident. The exact screen depends on whether your practice uses Xero HQ report templates; if you are unsure, your Xero adviser support can point you at it.

Then click Refresh (F12) on that ledger in Report Craft. From that refresh on:

• The account keeps the Equity type and the name Xero has for it. Nothing is rewritten.

• It stops printing in Equity on the Balance Sheet, so it is no longer counted as capital.

• It prints in the Appropriation report, under Less Appropriation/Distributions, and is included in that total.

• Open the Trial Balance with details showing and the account's panel lists its ReportingCode, so you can check the code actually arrived.

The code is what does the work, not the name beside it. The same code comes back under different names on different Xero files, so Report Craft matches on the code itself.

• Set the reporting code in Xero. Report Craft reads it on each refresh and never writes it back, so the chart of accounts stays yours and stays in your ledger.

• Account names are not used to classify. Names are inconsistent and anyone can change them, so Report Craft treats them as a hint for troubleshooting, never as the answer.

• An account with no reporting code still reports. It falls back to its account type and then its class, so nothing is left out of a statement because a code is missing.

• Refresh after a change. Once you have set or corrected a reporting code in Xero, click Refresh (F12) in Report Craft to pull it through.

Reading the classification from Xero means your chart of accounts does not have to be reshaped to suit Report Craft: an account that is Equity in your ledger stays Equity in your ledger. It also means a change you make in Xero is picked up on the next refresh, with nothing to re-map in two places.