Bookkeeping and close
Practical steps, records and official guidance on bookkeeping and close.
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Questions
51. Why does my Xero bank balance differ from my bank statement?
Reconcile the bank statement and Xero at the same date before posting a correction.
- Compare statement lines with ledger transactions, outstanding payments and deposits.
- Investigate missing feeds, duplicates, opening balances and items dated outside the period.
Do not post a balancing journal while the cause remains unknown.
Record keeping for business · Monthly close review pack
Link to question 5152. How do I identify and fix duplicate bank transactions in Xero?
Identify whether the duplicate is a statement line, an accounting transaction or both.
- Match date, amount, bank reference and source document; distinguish repeated genuine payments.
- Use the appropriate Xero correction after review, then rerun the bank reconciliation.
Removing the wrong item can remove a real transaction; retain the correction trail.
Link to question 5253. How do I correct a customer payment matched to the wrong invoice?
Trace the payment and both customer invoices before changing the match.
- Save the original allocation details and check whether the invoice or period is locked.
- Correct the allocation through Xero’s supported workflow and recheck both customer balances and the bank reconciliation.
A different bank receipt should not be created merely to fix an allocation.
Link to question 5354. How do I record a personal purchase paid from the business account?
Code the private payment according to the entity and the person’s relationship to it.
- Keep the receipt, purpose and repayment evidence, and separate any business portion.
- For a sole trader, review drawings; for a company, review the director or shareholder account and tax consequences.
A company payment cannot automatically be treated as sole-trader drawings.
Record keeping for business · Division 7A review case and limitations
Link to question 5455. Which business records should I keep, and for how long?
Keep most business records for 5 years. Keep records for depreciating assets and CGT assets until 5 years after you dispose of the asset. Keep records that let someone trace transactions, calculations and decisions for the required retention period.
- Create a register covering tax, payroll, assets, loans, contracts and entity records.
- Assign retention dates using the relevant ATO and other legal requirements, including longer periods for continuing assets or disputes.
Do not apply one blanket retention date to every document.
Record keeping for business · Overview of record-keeping rules for business · Records you need to keep for longer than five years
The bold answer was checked on 27 September 2026.
Link to question 5556. How should I organise my chart of accounts?
Use a chart of accounts that supports reporting and reconciliations at a manageable level of detail.
- Separate assets, liabilities, equity, revenue and expenses; keep control accounts identifiable.
- Use consistent account mappings and tracking categories for the dimensions you need to report.
Do not create a new account for every customer or supplier when the subledger already tracks them.
Record keeping for business · Monthly close review pack
Link to question 5657. How do I split a loan repayment between principal and interest?
Split each repayment using the loan statement and the agreement. Interest is a finance cost; principal reduces the loan balance.
- Reconcile opening principal, advances, principal repayments and closing principal.
- Use the loan calculator to sense-check a fixed-rate monthly schedule, then compare with the lender’s statement.
Fees, daily interest, variable rates and balloons need the actual lender schedule.
Set up a cash flow statement · Monthly loan payment calculator
Link to question 5758. Should a purchase be recorded as an asset or an expense?
Apply your accounting policy to the nature, use and expected benefit of the purchase, then assess tax separately.
- Record what was acquired, cost, useful life and when it became available for use.
- If capitalised, update the asset register and depreciation; document any tax difference.
An accounting asset policy and an immediate tax deduction rule can give different treatments.
Record keeping for business · Experimental tax worksheets and supported years
Link to question 5859. Why do my aged receivables or payables differ from the general ledger?
Compare the aged report and ledger on the same date with the same filters.
- Trace journals to control accounts, prepayments, credits, foreign-currency adjustments and excluded contacts.
- Prepare a bridge to the ledger and resolve unexplained items before closing.
A matching total alone does not establish that individual balances are collectible or payable.
Record keeping for business · Monthly close review pack
Link to question 5960. What should I reconcile and check before closing the month or financial year?
Close from reconciled balances and documented review decisions.
- Reconcile bank, receivables, payables, GST, payroll, super, loans, fixed assets and key accruals.
- Review cut-off, unusual journals and variances, then retain the pack and approval before locking the period.
Fictional worked example
At 30 September 2026, a fictional bank statement shows $12,000 and the ledger bank account shows $11,700. A $300 customer receipt is on the statement but missing from the ledger. After confirming the invoice and posting the missing receipt, both bank balances are $12,000. The aged receivables report still shows $9,500 against a $10,000 control account. Record that separate $500 exception, its owner and the evidence needed to resolve it before completing the close.
The existing close pack supports review; it does not automatically approve journals or finalise accounts.
Record keeping for business · Monthly close review pack
Link to question 60Reviewed 11 September 2026. Use the same reporting date and accounting basis for all reconciliations. Tax guidance must match your year and circumstances.
One of 10 topics in the 100 Australian accounting questions.