Junior Accounting Qualification (China) cheat sheet

Accounting equation: Assets = Liabilities + Owner's Equity; expanded: Assets = Liabilities + Owner's Equity + (Revenue − Expenses).

Double-entry rule: every transaction is recorded with equal debits and credits; total debits must equal total credits in each entry and in the trial balance.

Normal balances: assets and expenses are debit-balance accounts (increase by debit); liabilities, owner's equity, and revenue are credit-balance accounts (increase by credit).

Depreciation - straight line: annual depreciation = (original cost − estimated residual value) ÷ useful life in years; monthly = annual ÷ 12.

Depreciation - double-declining balance: annual rate = 2 ÷ useful life; depreciation = beginning-of-year net book value × rate; switch to straight line over remaining life when that yields a larger charge.

Depreciation - sum-of-the-years'-digits: annual depreciation = (cost − residual value) × remaining years ÷ [n(n+1)÷2], where n = useful life.

Inventory cost formulas: weighted average unit cost = total cost of goods available for sale ÷ total units available; FIFO charges earliest costs to cost of goods sold.

Allowance method: bad debt provision = ending receivables balance × estimated percentage; current-period charge = required ending balance − existing credit balance (add back any debit balance).

Gross profit on sales: gross profit = revenue − cost of goods sold; gross margin ratio = gross profit ÷ revenue.

Value-added tax small-scale taxpayer standard: annual taxable sales of RMB 5 million or less; small-scale taxpayers use the 3% levy rate (reduced rates apply under current preferential policies).

VAT general taxpayer input tax is deductible only with a valid special VAT invoice or other permitted voucher; input tax on tax-exempt items, collective welfare, or personal consumption is not deductible.

Individual income tax comprehensive income: annual taxable income = annual income − RMB 60,000 basic deduction − special deductions (social insurance and housing fund) − special additional deductions − other permitted deductions.

Special additional deductions include children's education, continuing education, serious illness medical expenses, housing loan interest or housing rent, elderly care, and infant and toddler care.

Enterprise income tax standard rate is 25%; small low-profit enterprises and high-tech enterprises are subject to preferential rates under current policy.

Labour contract probation limits by contract term: not more than 1 month for terms of 3 months to under 1 year; not more than 2 months for 1 to under 3 years; not more than 6 months for 3 years or more or open-ended contracts.

Statute of limitations for labour arbitration is 1 year from the date the party knew or should have known its rights were infringed; for arrears of labour remuneration during employment, no limit applies while employed.

Cheque presentation period is 10 days from the date of issue; the holder must present within that period or lose recourse rights against prior endorsers (rights against the drawer are retained).

Written劳动合同 must be concluded within 1 month of starting work; if not concluded within 1 month but less than 1 year, the employer pays double wages from the second month.