Czech Accounting Profession Certification flashcards

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

Accounting period

A 12-consecutive-month period for which books are kept; may be a calendar or fiscal year; a newly formed entity's first period may be shorter but must end on the last day of a calendar month.

Accounting document

A verified record of a transaction that must be complete, identify the parties, describe the transaction, and be signed by the preparer and approver; retained for 5 years.

Chart of accounts classes

Ten classes 0–9: fixed assets, inventories, financial accounts, receivables/payables, capital, expenses, revenues, closing accounts, off-balance sheet, and internal accounting.

Tax depreciation groups

Assets are classified into six groups with set useful lives (3, 5, 10, 20, 30, 50 years); straight-line and accelerated methods are permitted under §31 and §32 ZDP.

Tax loss carryforward

A tax loss may be carried forward for 5 years; the taxpayer must apply it in the earliest year first; it cannot be claimed in the year of liquidation or transformation.

Tax records

Daňová evidence used by sole traders under the turnover threshold; tracks income, expenses, receivables, payables, inventory, and assets on a cash basis.

VAT registration threshold

Mandatory VAT registration when turnover exceeds 2,000,000 CZK in 12 consecutive months; voluntary registration is possible at any time; effective from the 3rd working day after exceeding.

Reverse charge

A mechanism where the customer, not the supplier, reports and pays VAT; applies to construction works, scrap, selected electronics, and cross-border B2B services under §9(1).

Control statement

A report filed with the VAT return listing B2B invoices over 10,000 CZK, imported goods, and selected transactions; used by the tax administration to cross-check VAT returns.

Employee social insurance

Employee pays 7.1% (6.5% pension + 0.6% sickness); employer pays 24.8% (21.5% pension + 2.1% sickness + 1.2% unemployment); health insurance is 9% split equally.

Sick leave compensation

First 14 calendar days paid by the employer at 60% of reduced earnings; from day 15 the Czech Social Security Administration pays 60% of the daily assessment base.

Severance pay

One average monthly earnings for under 2 years of service, two for 2–5 years, three for 5–10 years, and four for 10 or more years of service.

Break-even point

Fixed costs divided by contribution margin per unit; contribution margin equals price minus variable cost per unit; expressed in units or in revenue.

Contribution margin ratio

Revenues minus variable costs, divided by revenues; break-even revenue equals fixed costs divided by the contribution margin ratio.

Activity-based costing

A costing method that allocates overhead to cost objects based on activities and their drivers, such as machine setups, orders, or inspections, rather than volume-based bases.

Audit risk model

Audit risk equals inherent risk times control risk times detection risk; the auditor reduces detection risk through substantive procedures and tests of controls.

Audit opinion types

Unmodified (clean), qualified, adverse, and disclaimer; emphasis of matter and other matter paragraphs do not modify the opinion but draw attention to specific matters.

Auditor rotation

For public-interest entities, the audit firm rotates after 10 years, extendable to 20 years with a tender or 24 years with a joint audit under EU Regulation 537/2014.

Accounting entity

A legal entity with registered office in the Czech Republic, a foreign entity doing business there, or an individual with turnover over 25 million CZK or keeping books voluntarily.

Tax return deadline

Three months from the end of the tax period; extended to four months for electronic filing and six months if prepared by a tax adviser or if the entity is audited.

Anti-money laundering duty

Accountants must identify clients, apply customer due diligence, identify beneficial owners, and report suspicious transactions to the Financial Analytical Office; records kept 10 years.

Inventory count

Physical count of assets and verification of liabilities at the balance-sheet date; differences are booked as shortages (manco) or surpluses (přebytek).

Technical improvement

An improvement to a fixed asset that exceeds 40,000 CZK per year and increases the asset's value; otherwise it is treated as a repair and expensed.

Closing entries

Transfer expense and revenue accounts to 710, then close 710 to 702 (profit) or 701 (loss); the result is transferred to retained earnings (431) or uncovered loss (429).

Statutory audit thresholds

Two of three thresholds exceeded for two consecutive periods: total assets over 40 million CZK, net turnover over 80 million CZK, average employees over 50.

Post-balance-sheet events

Adjusting events provide evidence of conditions at the balance-sheet date and are recognised; non-adjusting events arise after and are disclosed only in the notes.

Tax base calculation

Accounting profit plus non-deductible expenses minus non-taxable income minus items taxed separately; the result is rounded down to whole thousands of CZK.

VAT rates

Standard rate 21%; reduced rate 12% from 2024 for food, medicines, books, accommodation, and selected services; 0% for exports and intra-community supplies.

Personal income tax rates

15% on gross income up to 48 times the average wage (monthly threshold 146,424 CZK in 2024); 23% on income above that threshold.

Standard costing variances

Price variance equals (actual price minus standard price) times actual quantity; quantity variance equals (actual quantity minus standard quantity) times standard price.

Internal control components

COSO framework: control environment, risk assessment, control activities, information and communication, and monitoring activities; segregation of duties is a key preventive control.

GDPR data retention

Personal data must be processed lawfully, fairly, and transparently; payroll data is retained 30 years for social security; data subjects have access, rectification, and erasure rights.