Accounting system of Czech Republic Neisse University May 2016

Pre communist accounting Schmalenbach's chart German commercial code

Communist accounting "double entry bookkeeping„ charts of accounts accounting schedule

Forms of financial statements Required by law from : 1.Stock companies 2.Large limited liability companies 3.Cooperatives Forms with layout provided by Ministry of Finances Accessible for: 1.Financial office 2.Statistic office 3.Person with interest in it

Allowed accounting policies 1.IAS or IFRS 2.U.S. GAAP 3.Domestic principles given by law

Financial statement Mandatory: 1.Profit and loss statement 2.Balance Sheet 3.Explanatory notes to the accounts Different mandatory statements for: 1.Banks 2.Insurance companies 3.Non-profit organizations True and fair statement of assets and liabilities

Inventory calculation Shown at the lower cost -> provision Calculation: FIFO & AVCO method Spare parts are also inventory in Czech Republic Work-in-progress -> final or actual cost

Cash-Flow statement Mandatory According to IFRS 7 Direct/Indirect method Classification mandatory Financial institutes excluded

Changes in statement When to change statement? In year when they occur: 1.Change of policy 2.Fundamental error Changes in estimation of income when identifies

Events after BS date Prudence principle Recording: Expenses and Liabilities as soon as possible Revenues only when they are realized or assured

Construction contract Recognized when finished

Income tax 19% from income Examples of exempts are: 1.donations and income for churches 2.Income of Czech national bank 3.Member donations specified by Czech tax law 4.Incomes obtained thanks shares

PROPERTY, PLANT AND EQUIPMENT In the balance sheet as fixed assets (useful life is longer than 1 year) Valued at historical cost, or at replacement cost when recieved free or charge Equipment and machines > included only if their price is higher than CZK Depreciation (straight-line depreciation or accelerated tax depreciation) and devaluation every year

LEASES Conditions set by income tax law Lease period exceeds 40% of the depreciation period and the minimal period of 3 years

REVENUE TOTAL REVENUE (TR) = PRICE (P) x QUANTITY (Q)

EMPLOYEE BENEFITS Companies pay special contribution 26% of payroll is paid by the firm 8% is paid by the employee

CHANGES IN FOREIGN EXCHANGE RATES Foreign n currency transactions > translated at the transaction-date rate or at a fixed rate

GOODWILL Intangible asset Good customers relations, good employee relations Negative goodwill

INVESTMENTS IN SUBSIDIARIES A subsidiary = a company which is controlled by another company

INVESTMENT IN ASSOCIATES An associate company = a company which is partly owned by another company or group of companies

Provision account, which records a present liability of a person (company) Liability is a present obligation of the entity arising from past events It might be seen in balance sheet

Intangible assets Patents, licenses, know how or software. Long-term intangible assets „smaller“ long-term intangible assets

Financial instruments Financial instruments are tradable assets of any kind. They can be cash, evidence of an ownership interest in an entity, or a contractual right to receive or deliver cash or another financial instrument

Excepted Future Developments According to new novel, what has been valid from Main changes in law about accounting: Distribution of accountant entity Distribution of consolidating groups „Entity of public interest“

Accounting schedule