Bulgarian Certified Expert Accountant Exam key terms

Accounting approach that records revenue when earned and expenses when incurred, regardless of when cash moves. It underpins IFRS financial statements and requires period-end adjustments for prepayments, accruals and deferred income.

Rule that expenses are recognised in the same period as the revenues they helped generate. It drives inventory cost of sales, depreciation charges and the amortisation of contract costs.

The amount at which an asset or liability is recognised in the statement of financial position after deducting accumulated depreciation, amortisation and impairment losses. It is the starting point for many IFRS measurements.

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is a market-based exit price, not entity-specific value.

The amount by which an asset's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of fair value less costs of disposal and value in use.

Tax recognised on temporary differences between the tax base of assets and liabilities and their carrying amounts, and on unused tax losses. It is measured at the rates expected to apply when the difference reverses.

The amount attributed to an asset or liability for tax purposes. For an asset it is the amount deductible against future taxable economic benefits; for a liability it is its carrying amount less amounts deductible in future.

A promise to transfer a distinct good or service to a customer. Revenue is recognised when each obligation is satisfied, either at a point in time or over time.

An entity's right to consideration in exchange for goods or services transferred, where that right is conditional on something other than the passage of time. It differs from a receivable, which is unconditional.

Sales revenue less all variable costs. It measures how much each unit or sale contributes towards covering fixed costs and generating profit, and is central to break-even and short-term decisions.

The level of activity at which total revenue equals total cost, giving neither profit nor loss. In units it equals fixed costs divided by contribution per unit.

A future, incremental cash flow that differs between alternatives and therefore matters for a decision. Sunk costs and apportioned fixed overheads are normally irrelevant.

The benefit forgone by choosing one course of action over the next best alternative. It is not recorded in the ledger but is essential in relevant-cost analysis and capital budgeting.

A system that sets predetermined costs for materials, labour and overhead, then compares actual results against them to produce variances. Variances are analysed to explain performance and trigger corrective action.

A budget restated for the actual level of activity achieved. Comparing it with actual results isolates spending variances from volume effects in variance analysis.

The threshold above which misstatements, individually or in aggregate, could influence the economic decisions of users of the financial statements. It guides risk assessment, testing extent and evaluation of uncorrected misstatements.

The risk that the auditor expresses an inappropriate opinion when the financial statements are materially misstated. It comprises inherent risk, control risk and detection risk.

An attitude of questioning mind, alert to conditions indicating possible misstatement through error or fraud, and a critical assessment of evidence. It is required throughout every audit engagement.

The processes designed and operated by those charged with governance and management to provide reasonable assurance about reliable reporting, effectiveness and efficiency of operations, and compliance with laws.

A control that separates authorisation, custody of assets, recording and reconciliation so that no single person can both commit and conceal an error or fraud. It is a core preventive control.

Freedom from relationships or interests that could compromise objectivity, covering both independence of mind and appearance. Safeguards and, where necessary, refusal or removal of the threat are required.

A situation where an accountant's or firm's interests, or duties to another party, could improperly influence professional judgement. It must be identified, disclosed and managed with safeguards.

A difference between an asset's carrying amount and its tax base that will produce taxable amounts in future periods when the asset is recovered. It gives rise to a deferred tax liability.

An indirect tax charged on supplies of goods and services, collected by businesses on behalf of the state and offset against input tax on purchases. The net amount is remitted periodically.

The setting of prices for transactions between related parties, including cross-border affiliates. Arm's length principles and documentation requirements aim to prevent profit shifting between tax jurisdictions.

The requirement that a financial institution hold regulatory capital in proportion to its risk-weighted assets. It protects depositors and the wider system against unexpected losses.

The blended required return on a firm's debt and equity, weighted by their market values. It is used as the discount rate for projects of average risk and in enterprise valuation.

The sum of a project's expected cash flows discounted at the required rate of return, minus the initial investment. A positive result indicates value creation.

The calculation and interpretation of financial ratios covering profitability, liquidity, efficiency and gearing to assess performance and position over time and against peers.

Current assets less current liabilities, representing funds tied up in day-to-day operations. Managing inventory, receivables and payables affects liquidity and financing needs.

The assumption that an entity will continue in operation for the foreseeable future without liquidation or ceasing trading. Management assesses it and auditors evaluate and report on it.

The principle that transactions are accounted for according to their economic reality rather than their legal form. It governs areas such as leases, factoring and special-purpose entities.

The system of rules, practices and processes by which a company is directed and controlled, allocating rights and responsibilities among shareholders, the board and management.

The use of techniques on large datasets to identify patterns, anomalies and trends supporting accounting judgement, audit testing and management decisions.