Bulgarian Certified Expert Accountant Exam cheat sheet

The balance sheet identity: Assets = Liabilities + Equity; every transaction preserves it, so double-entry errors of equal magnitude on the same side leave it intact.

Accrual basis: revenue is recognised when the performance obligation is satisfied and control transfers, not when cash is received; expenses match the revenue they helped generate.

Closing entries zero out temporary accounts (revenues, expenses, dividends) into retained earnings; permanent accounts carry forward.

Materiality threshold: misstatements are material if they could influence the economic decisions of users; both quantitative (e.g., 5% of profit before tax) and qualitative factors apply.

Depreciation methods: straight-line = (cost − residual) / useful life; reducing balance applies a fixed rate to carrying amount; units of production allocates by usage.

A change in accounting policy is applied retrospectively (restate comparatives); a change in accounting estimate is applied prospectively.

Impairment test: carrying amount vs. recoverable amount (higher of fair value less costs of disposal and value in use); write down to recoverable amount.

Errors discovered after reporting are corrected retrospectively as prior-period adjustments unless immaterial.

IFRS 15 five steps: identify contract; identify performance obligations; determine transaction price; allocate price to obligations; recognise revenue when each obligation is satisfied.

IFRS 16 lessee: recognise a right-of-use asset and a lease liability at present value of lease payments; short-term (≤12 months) and low-value leases may be expensed.

IFRS 9 classification: amortised cost if held to collect contractual cash flows that are solely payments of principal and interest; fair value through OCI if held to collect and sell; otherwise FVTPL.

IAS 36 impairment: recoverable amount = higher of fair value less costs of disposal and value in use; goodwill is tested annually regardless of indicators.

IFRS 3: acquiree's identifiable assets and liabilities are measured at acquisition-date fair value; goodwill = consideration transferred + NCI − net identifiable assets acquired.

IAS 37: recognise a provision when a present obligation from a past event is probable and can be reliably estimated; a contingent liability is only disclosed.

IAS 21: foreign currency monetary items are retranslated at closing rate with differences in profit or loss; non-monetary items at historical cost stay at historical rate.

IAS 1: a liability is classified as current unless the entity has an unconditional right to defer settlement for at least twelve months after the reporting date.

Contribution margin = sales − variable costs; contribution per unit = selling price − variable cost per unit.

Break-even units = fixed costs / contribution per unit; break-even revenue = fixed costs / contribution margin ratio.

Margin of safety = (actual or budgeted sales − break-even sales) / actual sales, expressed as a percentage.

Absorption costing includes fixed production overhead in product cost; variable costing treats it as a period cost, so profit differs by the change in inventory × fixed overhead per unit.

High-low method: variable cost per unit = (cost at high activity − cost at low activity) / (high activity − low activity); fixed cost = total cost − variable cost per unit × activity.

Overhead absorption rate = budgeted overhead / budgeted activity base; over- or under-absorption = actual overhead − absorbed overhead.

Standard costing variances: material price = (standard price − actual price) × actual quantity; material usage = (standard quantity − actual quantity) × standard price.

Relevant costs are future, incremental cash flows; sunk costs and allocated common fixed costs are irrelevant to a decision.

Audit risk = inherent risk × control risk × detection risk; the auditor controls only detection risk through the nature, timing and extent of procedures.

Risk assessment procedures include inquiry, analytical procedures and observation/inspection; they are performed to identify and assess risks of material misstatement.

The five components of internal control: control environment, risk assessment, control activities, information and communication, monitoring.

Substantive procedures comprise tests of details and substantive analytical procedures; they are required regardless of assessed control risk.

The auditor's report expresses an unmodified opinion when financial statements are prepared, in all material respects, in accordance with the applicable framework.

Modifications: qualified (material but not pervasive), adverse (material and pervasive misstatement), disclaimer (inability to obtain sufficient evidence, material and pervasive).

Independence: the auditor must be independent in mind and appearance; prohibited services include bookkeeping, management functions and contingent-fee engagements.

Audit sampling: sampling risk is the risk that the conclusion based on a sample differs from the conclusion based on the whole population.

Corporate income tax base = accounting profit adjusted for non-deductible expenses and non-taxable income; the standard Bulgarian corporate rate is 10%.

Tax losses may generally be carried forward; the carry-back is limited or absent, so timing of deductions matters.

Withholding tax applies to certain payments to non-residents (e.g., dividends, interest, royalties); treaty rates may reduce the domestic rate.

Personal income tax in Bulgaria is a flat 10%; social security contributions are split between employer and employee at statutory rates.

VAT: output tax on taxable supplies minus input tax on purchases; the standard Bulgarian VAT rate is 20%, with a reduced rate for certain supplies such as hotel accommodation.

VAT registration is mandatory once taxable turnover exceeds the statutory threshold; voluntary registration is possible below it.

Input VAT is recoverable only when the purchase is used for taxable business activity and a valid tax document is held.

Taxable persons must issue invoices, keep records and file periodic returns; late filing and late payment trigger interest and penalties.

A joint-stock company (AD) issues shares; shareholders' liability is limited to their contribution, and the minimum capital is set by statute.

A limited liability company (OOD) requires a minimum capital of BGN 2 (as amended) and has quotas, not shares; transfers of quotas are restricted.

The general meeting, the management board and the supervisory board are the principal governing bodies of a joint-stock company.

Directors owe duties of care and loyalty; a conflict of interest must be disclosed and the transaction approved by the competent body.

Accounting law requires double-entry bookkeeping, a chart of accounts, inventory counts and retention of accounting records for the statutory period.

Annual financial statements must be approved by the general meeting and filed with the commercial register and the statistical office.

Merger and division require a merger plan, creditor protection and registration; the successor assumes the predecessor's rights and obligations.

Insolvency proceedings may be opened when the debtor is unable to pay due obligations; the court appoints a trustee to administer the estate.

Net present value = Σ [CFt / (1 + r)^t] − initial investment; accept projects with NPV > 0.

Internal rate of return is the discount rate at which NPV = 0; accept if IRR exceeds the cost of capital.

Weighted average cost of capital = (E/V) × Re + (D/V) × Rd × (1 − tax rate).

Capital asset pricing model: Re = Rf + β × (Rm − Rf), where β measures systematic risk.

Payback period is the time to recover the initial outlay; it ignores cash flows after payback and the time value of money.

Profitability index = present value of future cash flows / initial investment; accept if greater than 1.

The time value of money: future value = present value × (1 + r)^n; present value = future value / (1 + r)^n.

Dividend valuation: value = expected dividend / (required return − growth rate), valid when growth is constant and less than the required return.

Current ratio = current assets / current liabilities; quick ratio = (current assets − inventory) / current liabilities.

Gross margin = gross profit / revenue; operating margin = operating profit / revenue; net margin = net profit / revenue.

Return on equity = net profit / average equity; return on assets = net profit / average total assets.

Debt-to-equity = total liabilities / total equity; interest cover = operating profit / interest expense.

Asset turnover = revenue / average total assets; inventory days = average inventory / cost of sales × 365.

The DuPont decomposition: ROE = net margin × asset turnover × equity multiplier.

Business valuation methods: income approach (discounted cash flow), market approach (multiples), and cost approach (net asset value).

Free cash flow to firm = operating cash flow − capital expenditure − change in working capital; discount at WACC to obtain enterprise value.

An ERP system integrates accounting, inventory, sales and purchasing into a single database, reducing duplicate data entry and reconciliation risk.

Segregation of duties in IT: the person who develops or administers a system should not also post transactions or approve payments.

General IT controls cover access management, change management, backup and disaster recovery; application controls cover input, processing and output.

Audit trails must be immutable; a system that allows silent edits to posted entries weakens evidence reliability.

Electronic invoices and e-signatures require authentication and integrity controls; the tax authority may require structured e-invoicing formats.

Data analytics in audit: full-population testing, anomaly detection and trend analysis increase coverage but depend on data completeness and accuracy.

Cloud accounting shifts risk to the provider; the entity must obtain assurance reports (e.g., SOC reports) and define data ownership and exit terms.

Personal data processing in accounting systems must follow data protection rules: lawful basis, minimisation, retention limits and access controls.

The five fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.

A self-interest threat arises from a financial or other interest that inappropriately influences judgement, such as a contingent fee or a loan from a client.

A self-review threat arises when the firm evaluates its own previous work, e.g., preparing the accounts and then auditing them.

Safeguards include rotating engagement partners, independent quality review, and removing the individual from the engagement.

Confidentiality continues after the professional relationship ends; disclosure is permitted only when required by law or authorised by the client.

Independence of mind is the state of mind enabling an opinion without being affected by influences that compromise judgement; appearance matters too.

Regulatory compliance includes anti-money-laundering obligations: customer due diligence, record-keeping and reporting suspicious transactions.

A member must not accept an engagement that the member is not competent to perform without obtaining the necessary expertise.

Price elasticity of demand = percentage change in quantity demanded / percentage change in price; demand is elastic when the absolute value exceeds 1.

GDP = consumption + investment + government spending + (exports − imports); it measures final goods and services produced domestically.

Inflation erodes purchasing power; central banks raise policy rates to reduce aggregate demand and contain inflation.

Corporate governance mechanisms: board independence, audit committees, separation of the CEO and chair roles, and transparent disclosure.

Agency theory: managers (agents) may pursue their own interests rather than shareholders' (principals'); monitoring and incentives align them.

The audit committee oversees financial reporting, external audit and internal control, and should consist of independent non-executive members.

Stakeholder theory holds that a firm is accountable to employees, customers, suppliers and the community, not only shareholders.

Market structures range from perfect competition to monopoly; the degree of market power affects pricing and profitability.

The balance sheet identity: Assets = Liabilities + Equity; every transaction preserves it, so double-entry errors of equal magnitude on the same side leave it intact.

Accrual basis: revenue is recognised when the performance obligation is satisfied and control transfers, not when cash is received; expenses match the revenue they helped generate.

Closing entries zero out temporary accounts (revenues, expenses, dividends) into retained earnings; permanent accounts carry forward.

Materiality threshold: misstatements are material if they could influence the economic decisions of users; both quantitative (e.g., 5% of profit before tax) and qualitative factors apply.

Depreciation methods: straight-line = (cost − residual) / useful life; reducing balance applies a fixed rate to carrying amount; units of production allocates by usage.

A change in accounting policy is applied retrospectively (restate comparatives); a change in accounting estimate is applied prospectively.

Impairment test: carrying amount vs. recoverable amount (higher of fair value less costs of disposal and value in use); write down to recoverable amount.

Errors discovered after reporting are corrected retrospectively as prior-period adjustments unless immaterial.

IFRS 15 five steps: identify contract; identify performance obligations; determine transaction price; allocate price to obligations; recognise revenue when each obligation is satisfied.

IFRS 16 lessee: recognise a right-of-use asset and a lease liability at present value of lease payments; short-term (≤12 months) and low-value leases may be expensed.

IFRS 9 classification: amortised cost if held to collect contractual cash flows that are solely payments of principal and interest; fair value through OCI if held to collect and sell; otherwise FVTPL.

IAS 36 impairment: recoverable amount = higher of fair value less costs of disposal and value in use; goodwill is tested annually regardless of indicators.

IFRS 3: acquiree's identifiable assets and liabilities are measured at acquisition-date fair value; goodwill = consideration transferred + NCI − net identifiable assets acquired.

IAS 37: recognise a provision when a present obligation from a past event is probable and can be reliably estimated; a contingent liability is only disclosed.

IAS 21: foreign currency monetary items are retranslated at closing rate with differences in profit or loss; non-monetary items at historical cost stay at historical rate.

IAS 1: a liability is classified as current unless the entity has an unconditional right to defer settlement for at least twelve months after the reporting date.

Contribution margin = sales − variable costs; contribution per unit = selling price − variable cost per unit.

Break-even units = fixed costs / contribution per unit; break-even revenue = fixed costs / contribution margin ratio.

Margin of safety = (actual or budgeted sales − break-even sales) / actual sales, expressed as a percentage.

Absorption costing includes fixed production overhead in product cost; variable costing treats it as a period cost, so profit differs by the change in inventory × fixed overhead per unit.

High-low method: variable cost per unit = (cost at high activity − cost at low activity) / (high activity − low activity); fixed cost = total cost − variable cost per unit × activity.

Overhead absorption rate = budgeted overhead / budgeted activity base; over- or under-absorption = actual overhead − absorbed overhead.

Standard costing variances: material price = (standard price − actual price) × actual quantity; material usage = (standard quantity − actual quantity) × standard price.

Relevant costs are future, incremental cash flows; sunk costs and allocated common fixed costs are irrelevant to a decision.

Audit risk = inherent risk × control risk × detection risk; the auditor controls only detection risk through the nature, timing and extent of procedures.

Risk assessment procedures include inquiry, analytical procedures and observation/inspection; they are performed to identify and assess risks of material misstatement.

The five components of internal control: control environment, risk assessment, control activities, information and communication, monitoring.

Substantive procedures comprise tests of details and substantive analytical procedures; they are required regardless of assessed control risk.

The auditor's report expresses an unmodified opinion when financial statements are prepared, in all material respects, in accordance with the applicable framework.

Modifications: qualified (material but not pervasive), adverse (material and pervasive misstatement), disclaimer (inability to obtain sufficient evidence, material and pervasive).

Independence: the auditor must be independent in mind and appearance; prohibited services include bookkeeping, management functions and contingent-fee engagements.

Audit sampling: sampling risk is the risk that the conclusion based on a sample differs from the conclusion based on the whole population.

Corporate income tax base = accounting profit adjusted for non-deductible expenses and non-taxable income; the standard Bulgarian corporate rate is 10%.

Tax losses may generally be carried forward; the carry-back is limited or absent, so timing of deductions matters.

Withholding tax applies to certain payments to non-residents (e.g., dividends, interest, royalties); treaty rates may reduce the domestic rate.

Personal income tax in Bulgaria is a flat 10%; social security contributions are split between employer and employee at statutory rates.

VAT: output tax on taxable supplies minus input tax on purchases; the standard Bulgarian VAT rate is 20%, with a reduced rate for certain supplies such as hotel accommodation.

VAT registration is mandatory once taxable turnover exceeds the statutory threshold; voluntary registration is possible below it.

Input VAT is recoverable only when the purchase is used for taxable business activity and a valid tax document is held.

Taxable persons must issue invoices, keep records and file periodic returns; late filing and late payment trigger interest and penalties.

A joint-stock company (AD) issues shares; shareholders' liability is limited to their contribution, and the minimum capital is set by statute.

A limited liability company (OOD) requires a minimum capital of BGN 2 (as amended) and has quotas, not shares; transfers of quotas are restricted.

The general meeting, the management board and the supervisory board are the principal governing bodies of a joint-stock company.

Directors owe duties of care and loyalty; a conflict of interest must be disclosed and the transaction approved by the competent body.

Accounting law requires double-entry bookkeeping, a chart of accounts, inventory counts and retention of accounting records for the statutory period.

Annual financial statements must be approved by the general meeting and filed with the commercial register and the statistical office.

Merger and division require a merger plan, creditor protection and registration; the successor assumes the predecessor's rights and obligations.

Insolvency proceedings may be opened when the debtor is unable to pay due obligations; the court appoints a trustee to administer the estate.

Net present value = Σ [CFt / (1 + r)^t] − initial investment; accept projects with NPV > 0.

Internal rate of return is the discount rate at which NPV = 0; accept if IRR exceeds the cost of capital.

Weighted average cost of capital = (E/V) × Re + (D/V) × Rd × (1 − tax rate).

Capital asset pricing model: Re = Rf + β × (Rm − Rf), where β measures systematic risk.

Payback period is the time to recover the initial outlay; it ignores cash flows after payback and the time value of money.

Profitability index = present value of future cash flows / initial investment; accept if greater than 1.

The time value of money: future value = present value × (1 + r)^n; present value = future value / (1 + r)^n.

Dividend valuation: value = expected dividend / (required return − growth rate), valid when growth is constant and less than the required return.

Current ratio = current assets / current liabilities; quick ratio = (current assets − inventory) / current liabilities.

Gross margin = gross profit / revenue; operating margin = operating profit / revenue; net margin = net profit / revenue.

Return on equity = net profit / average equity; return on assets = net profit / average total assets.

Debt-to-equity = total liabilities / total equity; interest cover = operating profit / interest expense.

Asset turnover = revenue / average total assets; inventory days = average inventory / cost of sales × 365.

The DuPont decomposition: ROE = net margin × asset turnover × equity multiplier.

Business valuation methods: income approach (discounted cash flow), market approach (multiples), and cost approach (net asset value).

Free cash flow to firm = operating cash flow − capital expenditure − change in working capital; discount at WACC to obtain enterprise value.

An ERP system integrates accounting, inventory, sales and purchasing into a single database, reducing duplicate data entry and reconciliation risk.

Segregation of duties in IT: the person who develops or administers a system should not also post transactions or approve payments.

General IT controls cover access management, change management, backup and disaster recovery; application controls cover input, processing and output.

Audit trails must be immutable; a system that allows silent edits to posted entries weakens evidence reliability.

Electronic invoices and e-signatures require authentication and integrity controls; the tax authority may require structured e-invoicing formats.

Data analytics in audit: full-population testing, anomaly detection and trend analysis increase coverage but depend on data completeness and accuracy.

Cloud accounting shifts risk to the provider; the entity must obtain assurance reports (e.g., SOC reports) and define data ownership and exit terms.

Personal data processing in accounting systems must follow data protection rules: lawful basis, minimisation, retention limits and access controls.

The five fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.

A self-interest threat arises from a financial or other interest that inappropriately influences judgement, such as a contingent fee or a loan from a client.

A self-review threat arises when the firm evaluates its own previous work, e.g., preparing the accounts and then auditing them.

Safeguards include rotating engagement partners, independent quality review, and removing the individual from the engagement.

Confidentiality continues after the professional relationship ends; disclosure is permitted only when required by law or authorised by the client.

Independence of mind is the state of mind enabling an opinion without being affected by influences that compromise judgement; appearance matters too.

Regulatory compliance includes anti-money-laundering obligations: customer due diligence, record-keeping and reporting suspicious transactions.

A member must not accept an engagement that the member is not competent to perform without obtaining the necessary expertise.

Price elasticity of demand = percentage change in quantity demanded / percentage change in price; demand is elastic when the absolute value exceeds 1.

GDP = consumption + investment + government spending + (exports − imports); it measures final goods and services produced domestically.

Inflation erodes purchasing power; central banks raise policy rates to reduce aggregate demand and contain inflation.

Corporate governance mechanisms: board independence, audit committees, separation of the CEO and chair roles, and transparent disclosure.

Agency theory: managers (agents) may pursue their own interests rather than shareholders' (principals'); monitoring and incentives align them.

The audit committee oversees financial reporting, external audit and internal control, and should consist of independent non-executive members.

Stakeholder theory holds that a firm is accountable to employees, customers, suppliers and the community, not only shareholders.

Market structures range from perfect competition to monopoly; the degree of market power affects pricing and profitability.