Xero Bank Reconciliation and Cash Management Flashcards

When importing a bank statement manually into Xero, which file format is most commonly supported?

Answer: CSV

Xero supports CSV (comma-separated values) as the primary format for manual bank statement imports, along with OFX and QIF.

What is the effect of reconciling a transaction in Xero on the company's financial statements?

Answer: It confirms that the bank activity matches the accounting records, with no new entries created

Reconciliation in Xero is a confirmation process — the accounting entries already exist, and reconciling simply confirms they match the bank statement.

A bank fee of $15 appears in the Xero bank feed with no corresponding transaction in Xero. What is the best way to handle this?

Answer: Create a spend money transaction coded to a bank charges expense account

Bank fees should be coded directly as a spend money transaction to a bank charges or similar expense account.

In Xero, how does a 'bank rule' differ from 'cash coding'?

Answer: Bank rules auto-suggest coding for future matching transactions; cash coding is a one-time bulk coding interface

Bank rules create standing automation that applies to new matching transactions, while cash coding is a manual batch tool for coding many transactions at once.

Which of the following would cause a reconciling item on a Xero bank reconciliation?

Answer: A check written in Xero but not yet presented to the bank

Outstanding checks issued in Xero but not yet cleared the bank are classic reconciling items because they exist in the books but not the statement.

In Xero, what does the 'Lock Date' feature do in the context of bank reconciliation?

Answer: Stops users from making changes to transactions before a specified date, protecting reconciled periods

The Lock Date prevents editing of transactions before a specified date, ensuring completed reconciliation periods remain intact.

A Xero user accidentally reconciled a bank transaction to the wrong invoice. What is the correct way to fix this?

Answer: Unreconcile the transaction by removing the match, then re-match it to the correct invoice

You can unreconcile a transaction in Xero by clicking on it and removing the match, then re-reconciling it to the correct invoice.