Items are things that you buy or sell. In Xero, both items are grouped in Inventory. Items can also be used for non-inventory things such as billing codes. You also have the ability to track the quantity of certain items.
To create an item, go to Accounts and then Inventory. Click +New Item as shown below.
In the New Item window, you can enter the unique Item Code and Name. If this is an item that you would like to track, then you can choose that option by click the box as shown below.
Click the box next to “I purchase this item”, and choose an expense account and Tax Rate for all items that you buy or that would appear on a bill. Click the box next to “I sell this item” and choose a Sales Account and Tax Rate for all items that you would put on an Invoice.
Some items are both bought and sold, so both options can be chosen as shown in the image above.
When you have entered all the information, click Save.