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Solutions

Multiple Choice Questions - Solutions​

  1. Closing entries transfer balances from:

    • Answer: b) Closing entries transfer temporary account balances (revenues, expenses) to permanent accounts (retained earnings).

  2. Which accounts are closed at period end?

    • Answer: b) Revenue and expense accounts (temporary accounts) are closed at period end.

  3. A post-closing trial balance contains:

    • Answer: b) Post-closing trial balance contains only permanent accounts (assets, liabilities, equity).

  4. Current ratio is calculated as:

    • Answer: b) Current Ratio = Current Assets ÷ Current Liabilities.

  5. In Luxembourg, annual accounts must be filed with RCS within:

    • Answer: c) Annual accounts must be filed within 7 months of fiscal year end.

  6. Working capital is:

    • Answer: b) Working Capital = Current Assets - Current Liabilities.

  7. A current ratio of 2.0 means:

    • Answer: a) Current ratio of 2.0 means €2.00 in current assets for every €1.00 in current liabilities.

  8. Income Summary is:

    • Answer: b) Income Summary is a temporary account used to summarize revenues and expenses during closing.

  9. In Luxembourg, accounting records must be retained for:

    • Answer: c) Luxembourg requires 10-year retention of accounting records.

  10. After closing entries, revenue and expense accounts have:

  • Answer: b) After closing, revenue and expense accounts are reset to zero for the next period.

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.