Bulgarian Certified Expert Accountant Exam flashcards

33 cards. Read the term and the definition here. The deck at the top of this page is optional.

Going concern assumption

The assumption that an entity will continue operating for the foreseeable future, at least twelve months after the reporting date, without liquidation or material curtailment of operations.

Accrual basis

Accounting method recognising revenue when earned and expenses when incurred, regardless of cash timing, so that each period reports the economic activity that belongs to it.

Performance obligation

A promise in a contract to transfer a distinct good or service to the customer; revenue is recognised when each such obligation is satisfied.

Right-of-use asset

The lessee's asset representing its right to use an underlying asset for the lease term, measured initially at the lease liability plus initial direct costs and prepayments.

Break-even point

The sales volume or revenue at which total contribution equals fixed costs, producing zero profit; calculated as fixed costs divided by contribution per unit.

Relevant cost

A future, incremental cash flow that differs between decision alternatives; sunk costs and allocated common fixed costs are excluded from the analysis.

Detection risk

The risk that the auditor's procedures fail to detect a material misstatement; it is controlled by the nature, timing and extent of audit procedures.

Audit sampling risk

The risk that the auditor's conclusion based on a sample differs from the conclusion that would be reached by testing the entire population.

Withholding tax

Tax deducted at source by the payer on certain payments, such as dividends, interest or royalties, and remitted to the tax authority on behalf of the recipient.

Input VAT

Value added tax paid on purchases and expenses that is recoverable against output VAT, provided the purchase serves taxable business activity and a valid document exists.

Limited liability company

A company whose owners hold quotas and whose liability is limited to their contributions; its governing body is the general meeting of partners.

Duty of loyalty

A director's obligation to act in the company's best interest, avoid conflicts of interest, and refrain from using the position for personal gain.

Weighted average cost of capital

The blended required return on a firm's equity and debt, weighted by their market values, used as the discount rate for project appraisal.

Internal rate of return

The discount rate at which a project's net present value equals zero; a project is acceptable when this rate exceeds the cost of capital.

Quick ratio

Current assets excluding inventory, divided by current liabilities; it measures the ability to meet short-term obligations without selling inventory.

DuPont analysis

A decomposition of return on equity into net profit margin, asset turnover and equity multiplier, showing which driver creates or erodes shareholder returns.

Segregation of duties

An internal control principle separating authorisation, custody, recording and reconciliation so that no single person can both perpetrate and conceal an error or fraud.

ERP system

An integrated software platform sharing a single database across accounting, inventory, purchasing and sales, reducing duplicate entry and improving data consistency.

Self-review threat

A threat to independence arising when a firm evaluates its own previous work, such as preparing financial statements and then auditing them.

Confidentiality principle

The ethical duty not to disclose client information acquired through professional relationships without authority, continuing even after the relationship ends.

Price elasticity of demand

The percentage change in quantity demanded divided by the percentage change in price; demand is elastic when the absolute value exceeds one.

Agency theory

A framework describing the conflict between principals such as shareholders and agents such as managers, addressed through monitoring, incentives and governance mechanisms.

Prior-period adjustment

A correction of a material error or a change in accounting policy applied retrospectively, adjusting opening retained earnings and restating comparative figures.

Goodwill on acquisition

The excess of consideration transferred plus non-controlling interest over the fair value of identifiable net assets acquired in a business combination.

Margin of safety

The excess of budgeted or actual sales over break-even sales, expressed as a percentage, indicating how far sales may fall before a loss arises.

Modified audit opinion

An opinion that is qualified, adverse or a disclaimer, issued when the financial statements contain material misstatement or sufficient evidence could not be obtained.

Taxable base

The amount on which tax is computed, derived from accounting profit adjusted for non-deductible expenses and non-taxable income under tax law.

Share capital

The amount contributed by shareholders in exchange for shares, recorded in equity and generally maintained as a protective buffer for creditors.

Net present value

The sum of discounted future cash flows minus the initial investment; a positive value indicates the project adds value at the given discount rate.

Interest cover

Operating profit divided by interest expense; it shows how many times operating earnings can cover finance costs, signalling financial risk.

Audit trail

A chronological record of system activity and entries that allows transactions to be traced from source documents to reports, supporting reliability of evidence.

Objectivity principle

The ethical requirement to avoid bias, conflict of interest or undue influence of others, so that professional judgements rest on evidence rather than preference.

Audit committee

A board committee of independent non-executive members overseeing financial reporting, external audit, internal control and the relationship with auditors.