Xero Certified Advisor Xero Reporting and Financial Analysis 4

Question 1

Which Xero report would an adviser use to analyse how long, on average, it takes the business to collect payment from customers?

Accepted Answer

Debtor Days calculation via Aged Receivables

Answer

Debtor days (average collection period) can be calculated using data from the Aged Receivables report—total debtors divided by daily sales.

Question 2

In Xero, what must be set up before you can produce a meaningful Budget vs. Actual Profit and Loss report?

Accepted Answer

A budget entered in the Budget Manager

Answer

Budget vs. Actual reporting requires that figures be entered in Xero's Budget Manager for the relevant accounts and periods.

Question 3

A Xero adviser notices the net profit on the Profit and Loss differs from the bank balance increase. Which concept explains this difference?

Accepted Answer

Accrual vs. cash timing differences and non-P&L balance sheet movements

Answer

Net profit and cash change differ because of non-cash items (depreciation, accruals) and balance sheet movements (loan repayments, asset purchases) that don't flow through the P&L.

Question 4

When using Xero's 'Find & Recode' feature (available in some regions), what is its primary use in a reporting context?

Accepted Answer

Batch-recoding transactions to correct account or tracking codes before reporting

Answer

Find & Recode lets advisers search for transactions and bulk-update their account codes, tax rates, or tracking categories to fix reporting errors.

Question 5

Which Xero report shows the gross profit margin by comparing revenue to the cost of goods sold?

Accepted Answer

Profit and Loss report (with COGS accounts)

Answer

The Profit and Loss report reveals gross profit margin when COGS accounts are mapped below revenue and above operating expenses.

Xero Certified Advisor Practice Test

Xero Certified Advisor Practice Test

Xero Certified Advisor Xero Reporting and Financial Analysis 4