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Solutions

Multiple Choice Questions - Solutions​

  1. Adjusting entries are made:

    • Answer: c) Adjusting entries are made at period end, after regular transactions, before financial statements.

  2. Which type of adjusting entry involves recording an expense and a liability?

    • Answer: c) Accrued expenses record an expense (debit) and a liability (credit).

  3. A business pays €1,200 for 12 months of insurance on January 1. The adjusting entry at the end of January should:

    • Answer: a) One month (€100) of insurance expires and becomes an expense.

  4. Depreciation is recorded as:

    • Answer: b) Depreciation increases accumulated depreciation, a contra-asset account.

  5. In Luxembourg, adjusting entries must:

    • Answer: c) Luxembourg requires accrual basis accounting and PCN compliance.

  6. An adjusted trial balance is prepared:

    • Answer: b) Adjusted trial balance is prepared after all adjusting entries are made.

  7. Unearned revenue is initially recorded as:

    • Answer: c) Unearned revenue is a liability because the business owes future services.

  8. Accrued salaries would be recorded as:

    • Answer: b) Accrued salaries record the expense and the liability to pay.

  9. Which PCN account is used for VAT Payable?

    • Answer: b) 430000 is VAT Payable (Class 4).

  10. Provisions in Luxembourg are classified in PCN:

  • Answer: a) Provisions are in Class 1 (110000-119999).

Note: Solutions will be provided in a separate solutions manual. For now, students should work through problems and cases, then compare with instructor-provided solutions or discuss in class.