Iran CPA Exam flashcards

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

IFRS 15 five-step model

Revenue is recognized by identifying the contract, identifying performance obligations, determining the transaction price, allocating it to obligations, and recognizing revenue when control transfers to the customer.

IFRS 16 lessee treatment

A lessee recognizes a right-of-use asset and a lease liability measured at the present value of lease payments, with exemptions available for short-term and low-value leases.

IAS 36 recoverable amount

Recoverable amount is the higher of fair value less costs of disposal and value in use; an asset is impaired when its carrying amount exceeds this amount.

IAS 12 deferred tax method

Deferred tax is recognized on temporary differences using the balance sheet liability method at the tax rate expected to apply when the asset is realized or the liability settled.

Audit risk model

Audit risk equals inherent risk multiplied by control risk multiplied by detection risk; higher assessed risks require lower detection risk and more substantive procedures.

Materiality benchmarks ISA 320

Common benchmarks are 5% of profit before tax, 1% of total assets, or 0.5–1% of revenue; performance materiality is set below overall materiality to reduce undetected misstatement risk.

ISA 700 auditor report

The auditor's report contains the opinion, basis for opinion, key audit matters for listed entities, and responsibilities of management and the auditor, with a clear conclusion on the financial statements.

ISA 570 going concern

The auditor evaluates management's going concern assessment covering at least 12 months from the reporting date and modifies the opinion if material uncertainty remains unresolved.

Iranian corporate tax rate

Under the Iranian Direct Taxes Act, legal entities pay a flat 25% corporate income tax on taxable income, computed as recognized revenue less deductible expenses.

Article 105 filing deadline

Iranian legal entities must file their annual corporate tax return within four months after the end of the fiscal year and settle the tax due, with penalties for late filing.

Iran VAT standard rate

The Iranian Value Added Tax Act applies a standard rate of 10% to taxable goods and services, with exemptions for specified basic goods such as food and medicine.

Article 143 depreciation

Under the Iranian Direct Taxes Act, fixed assets are generally depreciated on a straight-line basis over useful lives set by the Iranian National Tax Administration.

Commercial Code merchant

Iranian Commercial Code Article 20 defines a merchant as a person who habitually engages in commercial transactions as a profession; Article 2 lists commercial acts.

Joint stock company requirements

An Iranian joint stock company (شرکت سهامی) requires at least three shareholders and a board of directors; public joint stock companies must register with the Securities and Exchange Organization.

Civil Code Article 190

Iranian Civil Code Article 190 sets validity conditions for transactions: capacity of parties, mutual consent, a specific subject matter, and a legitimate purpose.

Tax dispute resolution boards

Iranian taxpayers may object to tax assessments before the tax dispute resolution board and appeal to the high tax council within statutory deadlines set by the Direct Taxes Act.

Break-even point formula

Break-even in units equals fixed costs divided by contribution margin per unit; break-even in sales value equals fixed costs divided by the contribution margin ratio.

Contribution margin ratio

Contribution margin equals sales revenue minus variable costs; the contribution margin ratio equals contribution margin divided by sales revenue and measures profitability per sales unit.

Equivalent units formula

Under weighted-average process costing, equivalent units equal units completed plus ending work-in-process multiplied by percentage complete; cost per unit equals total costs divided by equivalent units.

Material price variance

Material price variance equals (standard price minus actual price) multiplied by actual quantity; material usage variance equals (standard quantity minus actual quantity) multiplied by standard price.

WACC formula

Weighted average cost of capital equals (E/V) times equity cost plus (D/V) times debt cost times (1 minus tax rate), where V equals equity plus debt.

CAPM required return

The capital asset pricing model sets required return as the risk-free rate plus beta multiplied by the market risk premium; beta measures systematic risk that cannot be diversified away.

Net present value rule

Net present value equals the present value of cash inflows minus the initial investment; projects with positive NPV are accepted, and IRR is the rate where NPV equals zero.

Cash conversion cycle

The cash conversion cycle equals days inventory outstanding plus days sales outstanding minus days payables outstanding, measuring the time between paying suppliers and collecting from customers.

COSO control components

The COSO framework comprises five components: control environment, risk assessment, control activities, information and communication, and monitoring activities across the entity.

Segregation of duties

In an accounting information system, authorization, custody of assets, and record keeping are assigned to different people to reduce fraud and error risk.

Input edit checks

Input controls include validity, range, format, and check-digit tests, plus batch totals and reconciliation of source documents to input records before processing.

General IT controls

General IT controls cover access management, change management, backup and recovery, and IT operations, supporting the reliable functioning of application controls across systems.

IAS 7 interest classification

Under IAS 7, interest paid and dividends paid are classified consistently as operating or financing; interest and dividends received are usually investing for non-financial entities.

ISA 240 fraud presumption

ISA 240 presumes a risk of fraud in revenue recognition and requires procedures addressing management override of controls, including journal entry testing.

Article 132 tax incentive

Under the Iranian Direct Taxes Act, qualifying manufacturing and mining income may be fully or partly exempt, with enhanced exemptions in less-developed regions subject to INTA conditions.

Civil Code breach remedies

Iranian Civil Code Article 219 requires good-faith performance; Article 230 allows damages for breach, and Article 227 excuses performance where force majeure prevents it.