When creating a fixed asset in Xero, what initial step must be taken?

When creating a fixed asset in Xero, selecting a fixed asset start date is crucial because it establishes the starting point for the asset's depreciation and other relevant calculations. This date determines when the asset is considered to be in use and begins accumulating depreciation in the accounting records. Accurately setting this date ensures that financial reports reflect the asset's value and depreciation correctly over time, which is essential for managing the organization’s financial health.

The initial step of selecting the start date allows for proper tracking of the asset's value over its useful life, ensuring compliance with accounting standards. It enables Xero to automatically calculate depreciation from that start date, which impacts profit and loss statements. By starting this process correctly, subsequent steps in managing the fixed asset can be accurately aligned with the organization’s accounting policies.