Korea Computerized Tax Accounting Level 1 cheat sheet

Accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality, so a debit total always equals the credit total in a journal entry.

Double-entry rule set: debits increase assets and expenses, credits increase liabilities, equity, and revenue; contra accounts (accumulated depreciation, sales returns) move opposite to their parent account.

Accrual basis (발생주의): revenue is recognized when the performance obligation is satisfied and expenses when incurred, independent of cash receipt or payment; Korean GAAP (K-IFRS or 일반기업회계기준) applies accrual to all but very small entities.

Adjusting entries at period end fall into four types: accrued revenue, accrued expense, prepaid expense (선급비용) amortization, and unearned revenue (선수수익) recognition; each touches one income statement and one balance sheet account.

Depreciation formulas: straight-line = (cost − residual value) ÷ useful life; declining balance = carrying amount × rate; units-of-production = (cost − residual) × period output ÷ total output.

Closing process zeroes temporary accounts: revenue and expense balances transfer to Income Summary (집합손익), then to Retained Earnings (이익잉여금); permanent accounts carry forward.

Trial balance (시산표) proves debit-credit equality only; it cannot detect omitted entries, duplicate entries, or compensating errors of equal amount.

Normal balances: assets and expenses debit; liabilities, equity, and revenue credit; a debit balance in a liability account signals an overpayment or posting error.

Chart of accounts (계정과목) coding must be fixed before transaction entry; changing a code's parent or nature after postings exist forces re-mapping of every historical voucher.

Standard code structure in Korean systems: 3-digit account code plus separate fields for cost center (원가부문), department, and project; account code alone determines financial statement line placement.

Opening balance entry (기초잔액) is a one-time master step; only balance sheet accounts accept opening balances, and total debits must equal total credits before the period can be opened.

Fiscal year and period control: the system locks closed periods; reopening a closed period requires an authorized reversal of the closing entry, not a direct edit.

Customer/vendor master (거래처) fields that drive tax reporting: business registration number (사업자등록번호), VAT type (과세/면세/영세율), and whether the counterparty issues tax invoices.

An invalid or duplicate business registration number in the vendor master causes e-tax invoice (전자세금계산서) transmission rejection, so validate the 10-digit number with the check-digit rule at creation.

Voucher numbering (전표번호) should be system-generated and unique per type (general, tax invoice, cash); manual numbering creates duplicates and breaks audit trail continuity.

Access rights are assigned by role: entry clerk, approver, closing manager, and system administrator; segregation of entry from approval is the primary control configured at setup.

Voucher types in Korean systems: 일반전표 (general), 세금계산서전표 (tax invoice), 현금전표 (cash receipt/payment), and 대체전표 (transfer); the type determines which tax fields are mandatory.

Tax invoice purchase entry: debit expense or inventory plus debit 부가세대급금 (input VAT), credit accounts payable for the gross amount; the VAT line must match the invoice's tax amount exactly.

Tax invoice sales entry: debit accounts receivable for gross, credit revenue for supply value, credit 부가세예수금 (output VAT) for the tax amount.

Approval workflow: a voucher in draft (작성) status does not affect ledgers; only after approval (승인) does it post to the general ledger, so unapproved vouchers are excluded from trial balances.

Reversal rule: correct a posted voucher by creating a reversing voucher (역분개) referencing the original; direct deletion of posted vouchers destroys the audit trail.

Cash receipts entry debits cash/bank and credits the receivable or revenue; the deposit must reconcile to the bank statement line by line during bank reconciliation (예금잔액조정).

Evidence attachment: each voucher links to source documents (tax invoice, receipt, contract); missing evidence is flagged in the evidence management (증빙관리) module and blocks closing.

Cross-check after entry: run the account ledger (계정별원장) and compare voucher count and totals against the entry batch report before period close.

Korean VAT rates: 10% standard taxable rate, 0% zero rate (영세율) with input VAT refund, and exempt (면세) supplies with no output VAT and no input VAT deduction.

VAT period structure: first period Jan 1–Jun 30, second period Jul 1–Dec 31; returns are due 25 days after period end, with quarterly pre-payment (예정신고) for corporations.

Output VAT (매출세액) − input VAT (매입세액) = payable or refundable VAT; input VAT on non-deductible items (non-business use, passenger cars for general use, entertainment) is excluded.

Tax invoice issuance deadline: by the last day of the supply month for general taxpayers; late issuance adds a penalty of 1% (or 2% for post-supply issuance) of the supply value.

Zero-rate requires supporting documents (export declaration, foreign currency receipt); without them the supply is reclassified as taxable at 10%.

Electronic tax invoice (전자세금계산서): issued through the National Tax Service system or an authorized ASP; transmission must occur within the legal deadline to avoid penalties.

Withholding tax on payments to individuals or foreign entities is recorded as a liability at payment, not at year-end; it is remitted by the 10th of the following month.

Corporate tax accrual: record the estimated tax expense and liability at closing; the book-tax difference from non-deductible expenses is adjusted on the tax return, not in the book entry.

Closing sequence: post all adjusting entries, run the adjusted trial balance, generate statements, then close temporary accounts into retained earnings and lock the period.

Statement articulation: net income on the income statement equals the change in retained earnings before dividends; cash flow ending cash equals the balance sheet cash line.

Balance sheet classification: current assets/liabilities are those settled within one year or the operating cycle; non-current items are presented separately under K-IFRS or general GAAP.

Revenue recognition at closing requires checking cut-off: goods shipped but not invoiced (미청구) and invoices issued before delivery must be adjusted to the correct period.

Provision for severance (퇴직급여충당금) and bad debt allowance (대손충당금) are estimated at closing; the entry debits expense and credits the allowance contra account.

Comparative statements: prior-period figures must be restated when a policy change or error correction occurs, with the effect disclosed in the notes.

Post-closing checks: trial balance equality, zero balances in all temporary accounts, and reconciliation of subsidiary ledgers (receivables, payables, inventory) to the general ledger control accounts.

Retained earnings statement shows opening balance, prior-period adjustments, net income, and dividends; the closing balance must match the balance sheet equity line.

Segregation of duties: the person who enters a voucher cannot approve it, and the person who approves payment cannot reconcile the bank account.

Audit trail requirement: the system must log user ID, timestamp, and before/after values for every voucher creation, modification, and approval.

IT general controls cover access management, change management, and backup/recovery; application controls cover input validation, sequence checks, and reconciliation totals.

Input validation rules in accounting systems: account code must exist in the chart of accounts, debit must equal credit, and tax amount must equal supply value × rate for taxable invoices.

Three-way match (purchase order, receiving report, invoice) before payment approval prevents duplicate or unauthorized payments.

Backup policy: daily incremental and weekly full backups stored offsite; restoration must be tested, since an untested backup is not a control.

Master data change control: vendor bank account changes require independent verification, as this is the most common fraud vector in payment systems.

Periodic review controls: monthly review of the trial balance, quarterly review of user access rights, and annual review of the chart of accounts structure.