Folders for Source Files in XCode

Having to been used to Microsoft Visual Studio I'm more familiar with organising my source code into folders. From what I can see XCode has the same functionality, however this structure has no effect on the underlying structure stored on the disc. So to create a new folder in xCode you select the files you with to place in the folder and click "Project/Group" from the menu bar. Enter a name for the New Group and that's it. You can also create new groups by selecting "Project/New Group" from the menu bar.