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Chapter 7 – Exercises & Cases

Multiple Choice Questions​

  1. An accounting information system consists of how many main components?
    a) Three
    b) Four
    c) Five
    d) Six
    Answer: c) Five components: People, Procedures, Data, Software, IT Infrastructure.

  2. Which special journal is used to record credit sales?
    a) Cash Receipts Journal
    b) Sales Journal
    c) Purchases Journal
    d) Cash Disbursements Journal
    Answer: b) Sales Journal records credit sales.

  3. In Luxembourg, VAT returns must be filed through:
    a) Mail
    b) Fax
    c) eCDF platform
    d) In person
    Answer: c) All VAT returns must be filed electronically through eCDF.

  4. FAIA files must be in which format?
    a) PDF
    b) Excel
    c) XML (OECD SAF-T)
    d) Word
    Answer: c) FAIA must be in XML format based on OECD SAF-T standard.

  5. Which accounting software is specifically designed for Luxembourg?
    a) QuickBooks
    b) Xero
    c) Sage BOB
    d) Excel
    Answer: c) Sage BOB is specifically designed for Belgian and Luxembourg markets.

  6. A subsidiary ledger total should equal:
    a) Total assets
    b) The general ledger control account
    c) Total revenue
    d) Total expenses
    Answer: b) Subsidiary ledger total must equal the general ledger control account.

  7. Fiscal cash registers are required for:
    a) All businesses
    b) Only large businesses
    c) Restaurants and retail stores
    d) Service businesses only
    Answer: c) Fiscal cash registers are required for restaurants, retail stores, and businesses with cash sales.

  8. Which component of an AIS includes the rules and methods for processing data?
    a) People
    b) Procedures
    c) Data
    d) Software
    Answer: b) Procedures include the rules and methods for processing data.

  9. In Luxembourg, annual accounts must be filed with RCS:
    a) Within 3 months
    b) Within 5 months
    c) Within 7 months
    d) Within 12 months
    Answer: c) Annual accounts must be filed within 7 months of fiscal year end.

  10. Digital invoices in Luxembourg can be in which format?
    a) PDF only
    b) XML only
    c) PDF, XML, UBL, Peppol
    d) Paper only
    Answer: c) Digital invoices can be in PDF, XML, UBL, or Peppol formats.

Questions​

  1. Describe the five components of an accounting information system. How do they work together?

  2. Explain the purpose of special journals. What are the four common types, and when is each used?

  3. How does a sales journal differ from a general journal? What are the advantages of using a sales journal?

  4. What is a subsidiary ledger? How does it relate to the general ledger control account?

  5. Why must subsidiary ledger totals equal the general ledger control account? What would indicate an error?

  6. Describe career paths that combine accounting and information systems knowledge. Why are these valuable in Luxembourg?

  7. Compare Sage BOB and Odoo for a Luxembourg SME. What are the advantages and disadvantages of each?

  8. Explain eCDF requirements in Luxembourg. What must businesses do to comply?

  9. What is FAIA? When is it required, and what format must it be in?

  10. How do fiscal cash registers and digital invoicing support Luxembourg compliance? What are the requirements for each?

Problems Set A​

Problem A-1: Special Journal Entries

Record the following transactions in the appropriate special journals:

a) Credit sale of €1,000 (excluding VAT), VAT 17%, to Customer A b) Credit purchase of €2,000 inventory (excluding VAT), VAT 17%, from Supplier X c) Cash sale of €500 (excluding VAT), VAT 17% d) Payment of €2,340 to Supplier X e) Collection of €1,170 from Customer A

Problem A-2: Subsidiary Ledger

Create an Accounts Receivable subsidiary ledger for the following customers:

  • Customer A: Beginning balance €500, Sale €1,000, Collection €800
  • Customer B: Beginning balance €0, Sale €2,000, Collection €1,000
  • Customer C: Beginning balance €300, Sale €500, No collections

Calculate total and verify it equals the Accounts Receivable control account balance of €2,500.

Problem A-3: eCDF Filing

A business needs to file its quarterly VAT return through eCDF. The business has:

  • VAT Payable (17%): €3,400
  • VAT Payable (3%): €300
  • VAT Recoverable (17%): €2,000
  • VAT Recoverable (3%): €100

Calculate net VAT and explain the eCDF filing process.

Problem A-4: Software Selection

List the criteria a Luxembourg SME should consider when selecting accounting software. Rank them in order of importance.

Problem A-5: FAIA Preparation

What data must be included in a FAIA file? List the main components and explain why each is important.

Problems Set B​

Problem B-1: Complete Special Journal System

Set up special journals for a Luxembourg retail store and record the following November transactions:

  1. Credit sale €5,000 (excluding VAT), VAT 17%, to Customer A
  2. Credit purchase €8,000 inventory (excluding VAT), VAT 17%, from Supplier X
  3. Cash sale €2,000 (excluding VAT), VAT 17%
  4. Credit sale €1,000 children's clothing (excluding VAT), VAT 3%, to Customer B
  5. Payment €8,000 to Supplier X
  6. Collection €5,850 from Customer A
  7. Pay rent €1,200
  8. Pay salaries €3,000

Post totals to general ledger and individual items to subsidiary ledgers.

Problem B-2: Subsidiary Ledger Reconciliation

Prepare a reconciliation showing that Accounts Receivable subsidiary ledger totals equal the general ledger control account. Use the following data:

Subsidiary Ledger:

  • Customer A: €2,500
  • Customer B: €1,800
  • Customer C: €700
  • Customer D: €500

General Ledger Control Account: €5,500

Verify and explain any differences.

Problem B-3: eCDF and FAIA Compliance

Explain what a Luxembourg SARL must do to comply with: a) eCDF filing requirements b) FAIA export requirements c) How accounting software supports these requirements d) What happens if requirements are not met

Problem B-4: System Integration

A Luxembourg restaurant uses a POS system and accounting software. Explain: a) How the systems should integrate b) What data flows between systems c) How this supports compliance d) What PCN accounts are involved e) How VAT is handled

Comprehensive Problem​

Comprehensive Problem 7: Complete AIS Implementation

Tech Solutions SARL is implementing a new accounting information system. The business currently uses Excel but needs to upgrade for compliance and efficiency.

Current Situation:

  • 50+ transactions per month
  • Multiple customers and suppliers
  • Different VAT rates (3%, 17%)
  • Need eCDF filing capability
  • Need FAIA export capability
  • 5 employees need access

Required:

  1. System Selection:
    a) Evaluate Sage BOB, Odoo, and QuickBooks for this business
    b) Recommend one system and justify your choice
    c) List implementation requirements

  2. Special Journals Setup:
    a) Design special journals needed
    b) Show format for each journal
    c) Explain posting procedures

  3. Subsidiary Ledgers:
    a) Design Accounts Receivable subsidiary ledger
    b) Design Accounts Payable subsidiary ledger
    c) Show reconciliation process

  4. eCDF Integration:
    a) Explain how the system will support eCDF filing
    b) What data will be exported
    c) What procedures are needed

  5. FAIA Capability:
    a) Explain FAIA export requirements
    b) How the system will generate FAIA
    c) What testing is needed

  6. Implementation Plan:
    a) Steps for implementation
    b) Data migration process
    c) Staff training requirements
    d) Timeline

  7. Compliance Verification:
    a) How to verify PCN compliance
    b) How to verify VAT tracking
    c) How to verify eCDF/FAIA capability
    d) Ongoing compliance procedures

Cases​

Case 7-1: Choosing the Right System

Marie's restaurant has outgrown her manual accounting system. She's considering:

  • Sage BOB (recommended by her accountant)
  • Odoo (recommended by a tech-savvy friend)
  • Continuing with Excel (cheapest option)

Business Needs:

  • Track restaurant sales (service) and retail sales (merchandise)
  • Handle multiple VAT rates (3%, 8%, 14%, 17%)
  • File VAT returns monthly
  • Prepare annual accounts
  • 2-3 users
  • Budget: €50-100/month
  • Limited technical expertise

Questions for Analysis:

  1. What are the advantages and disadvantages of each option for Marie's restaurant?

  2. Which system would you recommend? Why?

  3. What features are most important for Marie's specific needs?

  4. How would each system handle:
    a) Multiple VAT rates?
    b) eCDF filing?
    c) FAIA export?
    d) PCN compliance?

  5. What implementation challenges might Marie face?

  6. What training and support would Marie need?

Case 7-2: eCDF Filing Problems

A Luxembourg SME is having trouble filing its VAT return through eCDF. The business:

  • Uses accounting software (not Sage BOB)
  • Has multiple VAT rates
  • Files quarterly
  • Has limited IT knowledge

Problems:

  • Data doesn't match between system and eCDF
  • VAT calculations seem incorrect
  • System doesn't export in eCDF format
  • Filing is rejected

Questions for Analysis:

  1. What could be causing these problems?

  2. How should the business verify its accounting data before filing?

  3. What steps should be taken to resolve the issues?

  4. How can the business ensure accurate eCDF filing in the future?

  5. Should the business consider changing software? Why or why not?

  6. What professional help might be needed?

Solutions are published in supplementary/instructor/solutions/chapter_07_solutions.md.