Xero Certified Advisor Xero Bank Reconciliation and Cash Management 2 — Questions and Answers
Question 1: In Xero, what does the 'Statement Balance' on the bank reconciliation screen represent?
- The balance in your Xero account ledger
- The closing balance from your imported bank statement (Correct answer)
- The balance after all outstanding items are cleared
- The opening balance at the start of the period
Correct answer: The closing balance from your imported bank statement
The Statement Balance reflects the closing balance from your bank statement as imported into Xero.
Question 2: Which Xero feature allows you to set rules so that transactions matching certain criteria are automatically coded to specific accounts?
- Batch payments
- Bank rules (Correct answer)
- Cash coding
- Reconciliation reports
Correct answer: Bank rules
Bank rules in Xero automatically categorize transactions based on conditions such as payee name or amount.
Question 3: When a bank feed transaction in Xero shows as 'Received,' what does this typically indicate?
- An outgoing payment has been processed
- Money has come into the bank account (Correct answer)
- A bill has been paid in full
- An invoice has been created
Correct answer: Money has come into the bank account
A 'Received' transaction indicates funds have been deposited or transferred into the bank account.
Question 4: What happens to a transaction in Xero when you click 'OK' during bank reconciliation?
- The transaction is deleted from the bank feed
- The bank feed transaction is matched and reconciled to an existing Xero transaction (Correct answer)
- A new bill is automatically created
- The transaction is exported to a CSV file
Correct answer: The bank feed transaction is matched and reconciled to an existing Xero transaction
Clicking 'OK' confirms the match between the bank feed line and the corresponding Xero transaction, marking it as reconciled.
Question 5: In Xero, if a supplier payment appears in the bank feed but no corresponding bill exists, which option should you choose to handle it?
- Match it to an existing invoice
- Use 'Create' to post it directly to an expense account (Correct answer)
- Mark it as a bank transfer
- Archive the transaction
Correct answer: Use 'Create' to post it directly to an expense account
If no bill exists, you can use 'Create' to post the transaction directly as a spend money transaction coded to the relevant expense account.
Question 6: Which report in Xero shows you all unreconciled transactions and helps identify the difference between your book balance and bank balance?
- Profit and Loss
- Bank Reconciliation Summary (Correct answer)
- Aged Receivables
- Balance Sheet
Correct answer: Bank Reconciliation Summary
The Bank Reconciliation Summary report details unreconciled items and explains the difference between the statement and Xero balances.
Question 7: A business owner notices that the 'Balance in Xero' is higher than the 'Statement Balance' during reconciliation. What is the most likely cause?
- Duplicate bank feed transactions have been imported
- Outstanding payments or checks have been issued but not yet cleared the bank (Correct answer)
- An invoice has been incorrectly voided
- The bank feed connection has expired
Correct answer: Outstanding payments or checks have been issued but not yet cleared the bank
Outstanding issued payments that haven't cleared the bank yet will cause the Xero balance to exceed the statement balance.
Xero Certified Advisor Xero Bank Reconciliation and Cash Management 2
In Xero, what does the 'Statement Balance' on the bank reconciliation screen represent?