Xero Certified Advisor Xero Bank Reconciliation and Cash Management 3 — Questions and Answers
Question 1: In Xero, what is 'Cash Coding' primarily used for?
- Generating payroll reports
- Quickly coding multiple bank transactions at once without creating individual bills or invoices (Correct answer)
- Setting up a new bank account connection
- Importing a bank statement file
Correct answer: Quickly coding multiple bank transactions at once without creating individual bills or invoices
Cash Coding allows users to code multiple transactions in a spreadsheet-style view, speeding up the reconciliation process.
Question 2: When setting up a bank rule in Xero, which condition type would you use to match transactions from a specific supplier by their reference number?
- Amount
- Description
- Reference (Correct answer)
- Payee
Correct answer: Reference
The 'Reference' condition in bank rules matches transactions based on text in the reference field of the bank feed.
Question 3: In Xero, what does 'Find & Match' allow you to do during bank reconciliation?
- Search for and link a bank feed transaction to one or more existing Xero transactions (Correct answer)
- Create a new contact for an unknown payee
- Automatically import missing bank statements
- Run a duplicate transaction check across all accounts
Correct answer: Search for and link a bank feed transaction to one or more existing Xero transactions
'Find & Match' lets you search existing invoices, bills, or transactions in Xero to match against the selected bank feed line.
Question 4: A $500 bank deposit appears in the Xero feed but relates to a loan received, not a sales invoice. How should it be correctly reconciled?
- Match it to the nearest open invoice
- Create a receive money transaction coded to the loan liability account (Correct answer)
- Mark it as an owner's contribution without any account coding
- Leave it unreconciled until an invoice is raised
Correct answer: Create a receive money transaction coded to the loan liability account
A loan receipt should be coded to a liability account (e.g., Loan Payable) using a receive money transaction to accurately reflect the obligation.
Question 5: What is the purpose of the 'Exclude' option in Xero's bank reconciliation?
- To permanently delete a transaction from the bank feed
- To remove a transaction from the reconciliation list without posting it to the ledger (Correct answer)
- To void an existing invoice linked to the transaction
- To flag a transaction for review by the accountant
Correct answer: To remove a transaction from the reconciliation list without posting it to the ledger
Excluding a transaction hides it from the reconciliation screen without creating any accounting entries, useful for duplicates or errors.
Question 6: Which Xero account type should petty cash typically be set up as?
- Accounts Payable
- Bank account (other) (Correct answer)
- Fixed asset account
- Expense account
Correct answer: Bank account (other)
Petty cash is set up as a 'Bank account (other)' in Xero so transactions can be reconciled and tracked like any other cash account.
Question 7: In Xero, what does a 'Transfer' transaction in the bank reconciliation represent?
- A payment to a supplier that bypasses accounts payable
- A movement of funds between two bank accounts that are both tracked in Xero (Correct answer)
- An automated direct debit from a customer
- A payroll disbursement to employees
Correct answer: A movement of funds between two bank accounts that are both tracked in Xero
A Transfer records the movement of money between two Xero bank accounts, such as from a checking account to a savings account.
Xero Certified Advisor Xero Bank Reconciliation and Cash Management 3
In Xero, what is 'Cash Coding' primarily used for?