Tracking categories
As we covered earlier in this chapter, you can have a flat or a broad COA. By using tracking categories, you can have both. Tracking categories allow you to keep your COA flat while adding the multi-dimensional aspect of the broader COA. This allows you to track different areas of your business and see how they are performing.
Xero gives you two tracking categories with an unlimited number of tracking options within each category. To be honest, I would not keep adding tracking options past 100.
Let’s go back to our earlier discussion on revenue accounts. We talked about having multiple revenue accounts for the sales channel. If we went that route, let’s face it – we would want to track more than just the revenue. We would want to track the costs associated with those sales so that we can get a picture of the performance of each of those sales channels. We might even want to allocate other operating expenses as well as overhead to those...
