Myanmar CPA Part II flashcards

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

Accrual basis

Accounting assumption under which revenue is recognised when the performance obligation is satisfied and expenses when incurred, regardless of when cash is received or paid.

Net realisable value

Estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale; inventory is measured at the lower of cost and NRV.

Recoverable amount

The higher of an asset's fair value less costs of disposal and its value in use; an impairment loss arises when carrying amount exceeds recoverable amount.

Contingent liability

A possible obligation arising from past events whose existence will be confirmed only by uncertain future events, or a present obligation that cannot be reliably measured; it is disclosed, not recognised.

Goodwill at acquisition

Consideration transferred plus non-controlling interest plus fair value of previously held interest, less the fair value of identifiable net assets acquired in a business combination.

Non-controlling interest

The equity in a subsidiary not attributable to the parent; measured at acquisition at fair value or proportionate share, then increased by its share of post-acquisition profit and OCI.

Equity method

Accounting for associates and joint ventures: the investment is initially at cost, then adjusted for the investor's share of post-acquisition profit or loss, OCI and dividends received.

Control under IFRS 10

Investor has power over the investee's relevant activities, exposure to variable returns, and the ability to use its power to affect those returns; all three elements must exist.

Contribution margin ratio

Contribution per unit divided by selling price per unit, or total contribution divided by total sales; used to compute break-even revenue as fixed costs divided by the ratio.

Material price variance

Standard price minus actual price, multiplied by actual quantity purchased; a positive result is favourable because materials cost less than standard.

Margin of safety

Budgeted or actual sales minus break-even sales, expressed as a percentage of budgeted sales; it measures how far sales can fall before a loss arises.

Relevant cost

A future incremental cash flow that differs between alternatives; sunk costs, committed costs and non-cash book values are excluded from decision making.

Detection risk

The risk that the auditor's procedures fail to detect a material misstatement; it is controlled by the auditor through the nature, timing and extent of audit procedures.

Performance materiality

An amount set lower than overall materiality to reduce to an appropriately low level the probability that uncorrected and undetected misstatements exceed overall materiality.

Adverse audit opinion

Expressed when the auditor, having obtained sufficient appropriate evidence, concludes that misstatements are both material and pervasive to the financial statements as a whole.

Going concern material uncertainty

Where events or conditions cast significant doubt on the entity's ability to continue, the auditor includes a separate section in the report drawing attention to the related disclosure.

Myanmar corporate income tax rate

Under Myanmar's Income Tax Law, companies are generally taxed at 22% on taxable income, with special rates applying to specified sectors such as certain natural resource activities.

Myanmar commercial tax

A turnover tax charged on taxable goods and services at the standard rate of 5%, with higher rates for specified goods; exports are generally zero-rated.

Myanmar tax year

The Myanmar income tax year runs from 1 October to 30 September; income tax returns and payments follow statutory deadlines set under the tax administration law.

Residence for Myanmar tax

A resident taxpayer is taxed on worldwide income; a non-resident is taxed only on Myanmar-source income, including income from employment exercised in Myanmar.

Separate legal personality

A company is a legal person distinct from its members and directors; it owns property, contracts and sues in its own name, and members have limited liability.

Audit committee independence

The audit committee should consist of independent non-executive directors, oversee external audit and internal control, and meet the external auditor without management present.

Apparent authority

An agent binds the principal where the principal's conduct leads a third party reasonably to believe the agent has authority, even if actual authority is absent.

Related party disclosure

Financial statements must disclose relationships, transactions, outstanding balances and commitments with related parties, including key management personnel compensation and terms.

Weighted average cost of capital

The weighted average of the after-tax cost of debt and the cost of equity, using market value weights; it is the discount rate for average-risk projects.

Capital asset pricing model

Cost of equity equals the risk-free rate plus beta multiplied by the market risk premium; only systematic risk is rewarded because unsystematic risk can be diversified away.

Cash conversion cycle

Inventory days plus receivable days minus payable days; it measures the period between paying suppliers and collecting cash from customers, and shorter is better.

Internal rate of return

The discount rate at which a project's net present value is zero; accept the project when the IRR exceeds the cost of capital, subject to conventional cash flows.

Confidentiality principle

A fundamental ethical principle requiring accountants not to disclose or use client information without authority, continuing after the professional relationship ends, subject to legal exceptions.

Self-review threat

A threat to independence arising when an auditor evaluates previous work or judgements made by the same firm, for example preparing the financial statements then auditing them.

IT general controls

Controls over access management, program changes, backup and recovery, and physical security that support the consistent operation of application controls across systems.

Computer-assisted audit techniques

Audit software and tools used to extract, sort, analyse and test large client data populations, enabling full-population testing and identification of exceptions and anomalies.