Myanmar CPA Part I flashcards

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

Accrual Basis

Accounting method recognizing revenue when performance obligations are satisfied and expenses when incurred, regardless of cash timing. It matches costs with the revenues they help generate in the same period.

Net Realizable Value

Estimated selling price in the ordinary course of business minus estimated costs of completion and costs necessary to make the sale. Inventory is written down when NRV falls below cost.

Revaluation Surplus

Equity account accumulating upward revaluations of property, plant, and equipment. It is not distributable as profit and is transferred to retained earnings as the asset is used or derecognized.

Goodwill on Consolidation

Consideration transferred plus non-controlling interest plus previously held interest, minus fair value of identifiable net assets acquired. Positive goodwill is not amortized but tested annually for impairment.

Break-Even Point

Activity level at which total revenue equals total costs and profit is zero. In units it equals fixed costs divided by contribution per unit; in revenue it equals fixed costs divided by contribution margin ratio.

High-Low Method

Technique separating fixed and variable elements of a semi-variable cost using the highest and lowest activity levels. Variable rate equals cost difference divided by activity difference; fixed cost is the residual.

Contribution Margin

Sales revenue minus all variable costs. It contributes first toward covering fixed costs and then toward profit, and it is the basis for break-even, target profit, and limiting factor decisions.

Relevant Cost

Future incremental cash flow that differs between alternatives. Sunk costs, committed costs, and allocated common fixed overhead are excluded because they do not change with the decision.

Audit Risk Model

Audit risk equals inherent risk times control risk times detection risk. The auditor assesses inherent and control risk, then sets detection risk inversely so overall audit risk falls to an acceptably low level.

Detection Risk

Risk that auditor procedures fail to detect a material misstatement. It is controlled by the auditor through the nature, timing, and extent of substantive procedures, and it falls as inherent or control risk rises.

Qualified Audit Opinion

Issued when misstatements or scope limitations are material but not pervasive. The opinion paragraph states that, except for the matter described, the financial statements give a true and fair view.

Performance Materiality

Amount set below overall materiality to reduce the probability that uncorrected and undetected misstatements together exceed overall materiality. It guides the extent of audit procedures on individual balances.

Myanmar Tax Residence

A citizen domiciled in Myanmar, or a foreigner living in Myanmar at least 183 days in the income year. Residents are taxed on worldwide income; non-residents only on Myanmar-source income.

Commercial Tax Standard Rate

Five percent applies to most goods and services in Myanmar, while designated goods and services carry different scheduled rates. The applicable schedule must be checked for each transaction type.

Myanmar Capital Gains Tax

Gains on disposal of capital assets are taxed at ten percent for residents and non-residents on Myanmar-source gains, computed as sale proceeds less cost and allowable expenses.

Myanmar Withholding Tax

Payer obligation to deduct tax at prescribed rates on specified payments, including service fees to residents and Myanmar-source payments to non-residents, then remit to the Internal Revenue Department.

Consideration in Contract

Something of value exchanged between parties, such as money, goods, or a promise. It must be sufficient but need not be adequate, and past consideration is generally not valid.

Business Judgment Rule

Protects directors from liability for decisions made in good faith, on an informed basis, without conflicts of interest, and in the honest belief the decision serves the company.

Agency Problem

Conflict arising when managers pursue personal interests rather than shareholder wealth. Mitigated by performance-based pay, independent boards, audit committees, and transparent disclosure.

Private Company Limits

Under the Myanmar Companies Law 2017, a private company restricts share transfers and may have up to fifty members excluding employees, and it cannot offer shares to the public.

Price Elasticity of Demand

Percentage change in quantity demanded divided by percentage change in price. Demand is elastic when the absolute value exceeds one and inelastic when it is below one.

Real Versus Nominal GDP

Nominal GDP values output at current prices; real GDP values it at base-year prices, removing inflation effects. Real GDP is the appropriate measure for comparing output across periods.

Marginal Propensity to Consume

Fraction of an extra unit of income spent on consumption rather than saved. It determines the fiscal multiplier, which equals one divided by one minus the marginal propensity to consume.

Comparative Advantage

A country benefits from specializing in goods it produces at lower opportunity cost than trading partners, even when it is less efficient in absolute terms in every good.

Weighted Average Cost of Capital

Weighted average of after-tax cost of debt and cost of equity, using market value weights. It is the minimum required return for new projects of average risk.

Net Present Value

Present value of expected cash inflows minus initial investment, discounted at the cost of capital. Positive NPV adds value and indicates the project should be accepted.

Capital Asset Pricing Model

Required return equals risk-free rate plus beta times market risk premium. Beta measures systematic risk, which cannot be eliminated by diversification, unlike firm-specific risk.

Cash Conversion Cycle

Inventory days plus receivable days minus payable days. It measures how long cash is tied up in operations; a shorter cycle reduces working capital funding needs.

Segregation of IT Duties

Developers and system administrators should not hold production data entry rights. Access reviews, privileged access logging, and separate environments reduce the risk of unauthorized changes.

Confidentiality Principle

Accountants must not disclose client information without authority or legal obligation. Permitted disclosure includes legal requirements, court proceedings, and client consent after proper consideration.

Self-Review Threat

Arises when an accountant evaluates work they previously performed, such as auditing a system they designed. Safeguards include independent review or removing the individual from the engagement.

Multi-Factor Authentication

Access control requiring two or more independent credentials, such as a password plus a one-time code. It reduces the risk of unauthorized access from phishing or stolen passwords.