Skip to main content

Chapter 26 – Exercises & Cases

Multiple Choice Questions​

  1. The PCN (Plan Comptable Normalisé) is: a) Optional for small businesses b) Mandatory for all businesses in Luxembourg c) Only required for large corporations d) A recommendation, not a requirement Answer: b) The PCN is mandatory for all businesses operating in Luxembourg.

  2. How many main account classes does the PCN have? a) Five b) Six c) Seven d) Eight Answer: c) The PCN has seven main account classes (1-7).

  3. Which PCN class is used for customer accounts? a) Class 1 b) Class 4 c) Class 5 d) Class 7 Answer: b) Class 4 is used for third-party accounts, including customers (Account 411).

  4. Account 701 in the PCN represents: a) Purchases of goods b) Sales of goods c) Cash account d) Supplier accounts Answer: b) Account 701 represents sales of goods (Class 7 - Revenue Accounts).

  5. Which account is used for input VAT recoverable? a) 44571 b) 44581 c) 44551 d) 44561 Answer: c) Account 44551 is used for input VAT recoverable (TVA récupérable).

  6. Sub-accounts in the PCN: a) Are not allowed b) Can be used for detailed tracking while maintaining compliance c) Must follow a different numbering system d) Are only for large businesses Answer: b) Sub-accounts can be used for detailed tracking (e.g., 411.001, 411.002) while maintaining PCN compliance.

  7. The current PCN standard is: a) PCN 2011 b) PCN 2015 c) PCN 2020 d) PCN 2025 Answer: c) PCN 2020 is the current standard.

  8. Which class contains fixed assets? a) Class 1 b) Class 2 c) Class 3 d) Class 4 Answer: b) Class 2 contains fixed assets (tangible and intangible).

  9. When purchasing inventory on credit, which accounts are affected? a) Debit 601, Credit 401 b) Debit 401, Credit 601 c) Debit 601, Credit 512 d) Debit 701, Credit 411 Answer: a) Purchasing inventory on credit: Debit 601 (Purchases), Credit 401 (Suppliers).

  10. PCN compliance is required for: a) Only RCS filings b) Only tax returns c) Financial statements, RCS filings, and tax returns d) Only large businesses Answer: c) PCN compliance is required for financial statements, RCS filings, and tax returns.

Questions​

  1. Explain the purpose of the PCN and why it's mandatory in Luxembourg.

  2. Describe the seven PCN account classes and provide an example account for each class.

  3. How does the PCN account numbering system work? Provide examples of account numbers from different classes.

  4. Explain how to map a cash sale transaction (with VAT) to PCN accounts. Include all affected accounts.

  5. What is the difference between Account 44551 and Account 44581 in the PCN? When would you use each?

  6. How can businesses customize their chart of accounts while maintaining PCN compliance?

  7. Describe the key requirements for PCN compliance in Luxembourg.

  8. What are the consequences of non-compliance with PCN requirements?

  9. Explain how sub-accounts work in the PCN system. Provide an example.

  10. How does PCN 2020 differ from PCN 2011? What improvements were made?

Problems Set A​

Problem 1: Account Classification​

Classify the following accounts into their appropriate PCN classes:

  • Bank account
  • Customer accounts receivable
  • Sales revenue
  • Equipment (fixed asset)
  • Salaries expense
  • Inventory
  • VAT payable
  • Share capital

Solution Guide:

  • Bank account: Class 5 (Account 512)
  • Customer accounts receivable: Class 4 (Account 411)
  • Sales revenue: Class 7 (Account 701)
  • Equipment: Class 2 (Account 218)
  • Salaries expense: Class 6 (Account 621)
  • Inventory: Class 3 (Account 371)
  • VAT payable: Class 4 (Account 44571)
  • Share capital: Class 1 (Account 101)

Problem 2: Transaction Mapping​

Map the following transactions to PCN accounts:

a) Purchase €1,000 of inventory on credit (VAT 17%) b) Sell €500 of goods for cash (VAT 17%) c) Pay €800 to supplier d) Receive €1,170 from customer e) Pay €2,000 salary (gross)

Solution Guide: a) Debit 601 (€854.70), Debit 44551 (€145.30), Credit 401 (€1,000) b) Debit 530 (€585), Credit 701 (€427.35), Credit 44581 (€72.65) c) Debit 401 (€800), Credit 512 (€800) d) Debit 512 (€1,170), Credit 411 (€1,170) e) Debit 621 (€2,000), Credit 512 (€2,000) [simplified, excluding social charges]

Problem 3: Custom Chart of Accounts​

Design a customized chart of accounts for a restaurant business. Include:

  • Customer segmentation (retail, wholesale, online)
  • Product categories (food, beverages)
  • Expense categories (food purchases, rent, utilities)

Solution Guide:

  • 411.001: Retail customers
  • 411.002: Wholesale customers
  • 411.003: Online customers
  • 701.001: Food sales
  • 701.002: Beverage sales
  • 601.001: Food purchases
  • 601.002: Beverage purchases
  • 641.001: Rent
  • 613.001: Utilities

Problems Set B​

Problem 1: PCN Conversion​

A business has been using a custom chart of accounts and needs to convert to PCN 2020. Create a conversion plan including:

  • Mapping existing accounts to PCN accounts
  • Identifying missing PCN accounts
  • Steps for reclassifying historical transactions
  • Timeline for conversion

Problem 2: Compliance Audit​

You're preparing for a PCN compliance audit. Create a compliance checklist and explain how you would:

  • Verify account classifications
  • Ensure all seven classes are represented
  • Document custom accounts
  • Prepare financial statements using PCN structure

Problem 3: Software Implementation​

Design a plan for implementing PCN 2020 in accounting software. Include:

  • Software selection criteria
  • Chart of accounts configuration
  • Staff training requirements
  • Testing procedures
  • Go-live checklist

Comprehensive Problem​

Case: Le Petit Bistro PCN Implementation

Marie's restaurant, Le Petit Bistro, has been operating for one year using a simplified accounting system. She needs to convert to PCN 2020 compliance for her first RCS filing.

Requirements:

  1. Create a complete PCN 2020 chart of accounts for the restaurant
  2. Map all common restaurant transactions to PCN accounts
  3. Design custom sub-accounts for:
    • Customer types (dine-in, takeaway, delivery)
    • Product categories (food, beverages, catering)
    • Expense categories (food purchases, labor, rent, utilities)
  4. Create a compliance checklist
  5. Develop a training plan for staff

Deliverables:

  • Complete chart of accounts document
  • Transaction mapping guide
  • Compliance checklist
  • Staff training materials

Note: Complete solutions are available in the solutions manual.

End of Chapter 26 Exercises