Algeria IESPC Accounting Contest flashcards

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

Accounting equation

Assets equal liabilities plus equity. Every transaction affects at least two accounts and keeps the equality balanced, which underpins the double-entry bookkeeping system.

Accrual basis

Revenue is recognized when control of goods or services transfers and expenses when incurred, regardless of cash timing. This matches costs with the revenues they generate.

Lower of cost and NRV

Inventory is reported at the lower of its acquisition cost and net realizable value, meaning estimated selling price less costs to complete and sell, to avoid overstating assets.

Straight-line depreciation

Annual charge equals cost minus residual value, divided by useful life. The same amount is recorded each year, producing a constant charge over the asset's service period.

Contribution margin

Sales revenue minus variable costs. It measures the amount available to cover fixed costs and generate profit, and its ratio equals contribution divided by sales.

Break-even point

The sales volume at which total revenue equals total costs and profit is zero. In units it equals fixed costs divided by unit contribution margin.

Activity-based costing

Overhead is assigned to activities and then to products using cost drivers. This reduces distortion when products consume support activities in different proportions.

Relevant cost

A future incremental cash flow that differs between alternatives. Sunk costs and allocated fixed costs are excluded because they do not change with the decision.

Equivalent units

In process costing, partially completed units are converted into fully completed equivalents. Cost per equivalent unit equals total cost divided by equivalent units produced.

Audit risk model

Audit risk equals inherent risk times control risk times detection risk. The auditor lowers detection risk by expanding substantive testing when inherent or control risk is high.

Materiality

The threshold above which misstatements could influence users' economic decisions. It is set at planning, revised during the audit, and drives the extent of testing.

Segregation of duties

Authorization, custody of assets, recording, and reconciliation are assigned to different people. Combining them in one person increases the risk of undetected error or fraud.

Qualified opinion

Issued when misstatements are material but not pervasive, or when a scope limitation is material but not pervasive. The auditor states the basis for qualification.

COSO components

Control environment, risk assessment, control activities, information and communication, and monitoring. These five components structure the evaluation of internal control over financial reporting.

Corporate income tax

Algeria's IBS is levied on annual taxable profit at the rate set by the finance law, with reduced rates for certain sectors and investment-promotion regimes.

VAT standard rate

Algeria applies a standard VAT rate of 19% on most goods and services, with a reduced rate of 9% for specified items listed in the tax code.

Withholding tax

A tax deducted at source by the payer on specified payments such as services and royalties, then remitted to the tax administration on behalf of the recipient.

Taxable profit

The accounting result adjusted for non-deductible expenses, exempt income, and timing differences required by the tax code, forming the base for corporate income tax.

Commercial register

The official registry where traders and commercial companies are recorded. Registration confers commercial status and is a condition for lawfully exercising commercial activity.

SARL

A limited liability company with a minimum capital and one or more partners whose liability is limited to contributions. It is managed by a gérant appointed in the statutes.

Bill of exchange

A written instrument ordering payment of a sum at a set date. The drawer issues it, the drawee accepts it, and the payee receives payment.

Judicial liquidation

An insolvency proceeding ordered by the commercial court when reorganization is impossible. Assets are sold and proceeds distributed to creditors according to rank.

Net present value

The present value of expected future cash inflows minus the initial investment, discounted at the required rate. A positive NPV supports accepting the project.

WACC

The weighted average cost of capital blends the after-tax cost of debt and the cost of equity by their market-value proportions, serving as the discount rate for projects.

CAPM

Cost of equity equals the risk-free rate plus beta times the market risk premium. Beta measures the sensitivity of the stock's return to market movements.

Cash conversion cycle

Days inventory plus days receivable minus days payable. It measures how long cash is tied up in operations before collection from customers.

ERP system

Enterprise resource planning software integrates accounting, purchasing, inventory, and payroll on one shared database, reducing duplicate entry and improving consistency of financial data.

Audit trail

A chronological record of system activity that allows transactions to be traced from source documents to financial statements and back, supporting control and fraud detection.

Access control

Rules limiting who may view or modify accounting data. Role-based permissions and multi-factor authentication protect records from unauthorized change or disclosure.

Professional skepticism

An attitude of questioning information and corroborating management representations rather than accepting them at face value, especially where fraud risk indicators exist.

Confidentiality

The duty not to disclose client information obtained during an engagement without consent or legal requirement. It continues after the professional relationship ends.

Independence

Freedom from relationships, financial interests, or pressures that a reasonable third party would see as compromising objectivity, required for audit engagements.

Opportunity cost

The value of the next best alternative forgone when a resource is committed to one use. It is a relevant cost in economic and managerial decisions.

Public accountant liability

In public sector accounting, the comptable public is personally and financially liable for payments made without valid supporting documents or proper authorization.