Dustin Wheeler

Dustin Wheeler
Dustin is a technology-driven CPA in Orem, Utah.

Social Media

Follow me on Twitter

Set amount thresholds in Xero bank rules so fixed assets aren't expensed

One of my favorite things about Xero, an online accounting software, is its ability to automatically categorize transactions based on a customized set of rules.  While other accounting software have some built-in automation features (such as pre-filling information from the last entered transaction for a payee), Xero is unique in that it categorizes transactions when they match certain conditions for payees, amounts, references, etc.

While this automation can save a lot of time classifying transactions, it could also result in misclassifications if bank rules are applied carelessly.  For example, if both office supplies and fixed assets are purchased from a payee, additional conditions may be required in the bank rules so that transactions are classified correctly.  In the screenshot below, I created a bank rule so that amounts less than $500 spent at Best Buy are classified as office supplies expense (I’m using this amount as an example – consult your tax advisor to determine if a transaction should be expensed or capitalized).

Xero rule with threshold amount

On the reconcile screen, Xero prompts me to apply the rule for the amounts less than $500, but not for the $1,053.62 which may need to be categorized as a fixed asset.  That transaction is left open, forcing me to investigate it further and properly classify it.

Xero reconcile with bank rules

 

Leave a Reply

 

 

 

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>