FAR Reviewer PDF

**Reviewer for FAR** Lesson 1 * **Accounting** --* A service activity, It provide quantitative information primarily financial in nature, about economic entities that is intended to be useful in making economic decisions. it is an information system that measures processes and communicates financi...

**Reviewer for FAR** Lesson 1 * **Accounting** --* A service activity, It provide quantitative information primarily financial in nature, about economic entities that is intended to be useful in making economic decisions. it is an information system that measures processes and communicates financial information about an economic entity. - it is a process of identifying measuring, and communicating economic information to permit informed judgments and decision by users of the information - it is the [art of recording, classifying and summarizing] in a significant manner and in term of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof. * **Evolution of Accounting*** - accounting history is the "study of evolution in accounting thought, practices and institution in response to change in the environment and societal needs. it also considers the effect that this evolution has worked on the environment. " * **ASEAN Economic Community** --* The ASEAN Community is comprised of three pillars, namely: the [ ASEAN Political Security Community, ASEAN Economic Community, and ASEAN Socio -- Cultural Community. ] * **Four Pillars of ASEAN Economic Community:*** a. *single market and production base -* it measures to ensure the free flow of goods, services, investment, capital, skilled labor, and priority integration sectors. b. *competitive economic region -* actions on competition policy, consumer protection, intellectual property right, infrastructure development, taxation, e-commerce. c. *equitable economic development --* SME development, initiative for ASEAN integration d. *integration into the global economy -* coherent approach towards external economic relations, enhanced participation in global supply networks. ***Priority Integration Sectors:*** a. ***Goods** --* agro- based goods, automotive products, electronics/electrical, fisheries, rubber - based goods, textiles/clothing, and would - based products. b. ***Services*** - air transportation, e -- ASEAN, healthcare services, logistic, tourism. **TYPES OF BUSINESS** - hiring skilled stuff and selling their time - Examples: software development, accounting, legal - buying a range of raw materials and manufactured goods and consolidating them. - Examples: wholesaler, retailer - taking raw materials and using equipment and stuff to convert them into finished goods - Examples: vehicle assembly, constructions, engineering, electricity, water, food and drinks, chemicals, media, pharmaceuticals. - buying blocks of land and using them to provide raw materials - Examples: farming, mining, oil - buying and operating assets and selling occupancy often in combination with services - example transport ( *airport, operator, airlines, trains, ferries, buses*) hotels, telecoms, sport facilities, property management. - accepting cash from depositors and paying them interest - Examples: bank, investment house - collecting cash from many customers; investing the money to pay the losses experienced by a few customers - Examples: insurance ***FORMS OF BUSINESS ORGANIZATIONS*** a. ***Sole Proprietorship*** - this business organization has a single owner called the proprietor who generally is also the manager - the owner receives all profits, observes all losses and is solely responsible for all deaths of the business. b. ***Partnership*** - a partnership is a business owned a operated by two or more persons who bind themselves to contribute money, property, or industry to a common fund - each partner is personally liable for any debt incurred by the partnership c. ***Corporation*** - a corporation is a business owned by its stockholders. - the stockholders are not personally liable for the corporations debts, the corporation is a separate legal entity. *** MICRO, SMALL, AND MEDIUM ENTERPRISES (MSMEs)*** - *support industries as inciliary units, thereby contributing enormously to the overall industrial development of the country* ***Micro*** enterprises are those with assets, before financing, of P3.0 (before 1.5 million) or less and employee not more than nine workers. ***Small*** enterprises are those with assets, before financing, of above P3.0 (before P1.5 million) to P15 million and employee 10 to 99 workers. ***Medium*** enterprises have assets, before financing, above P15 million to P100 million and employed 100 to 199 workers ** ACTIVITIES IN BUSINESS ORGANIZATION** ***3 TYPES OF ORGANIZATIONAL ACTIVITIES*** a. ***financing activities*** - organizations require financial resources to obtain other resources used to produce goods and services. they compete for this resources in financial markets - financing activities are the methods an organization used to obtain financial resources from financial markets and how it manages these resources - primary sources of financing for most businesses are owners and creditors, such as banks and suppliers. - repaying the creditors and paying a return to the owners are also financing activities b. ***investing activities*** - managers use capital from financing activities to acquire other resources used in the transformation processes -- that is, to transform resources from one form to a different form, which is more valuable, to meet the needs of the people. c. ***operating activities*** - it involve the use of resources to design, produce, distribute, and market goods and services - organizations compete in suppliers and labor market for resources used in this activities. also they compete in product market to sell the goods and services created by operating activities. *** Purpose and Phases of Accounting*** - the accounting function is part of the broader business system, and does not operate in isolation. it handles the financial operations of the business but also provides information and advice to other departments. business transactions are the economic activities of a business. *** Memorandum*** - a [book where all transactions are recorded], in the currency in which they are conducted, at the time they are conducted. [it prepared in chronological order, is a narrative description of the business's economic events.] - memorandum is necessary because there are no documents to support transactions *** Journal*** -- it is the merchant's private book, the entries made here are in one currency, in chronological order, and a narrative form Other definiton of journal - a detailed account that records all the financial transactions of a business, to be used for the future reconciling of accounts and the transfer of information to other official accounting records, such as the general ledger. ***Ledger*** - it is an alphabetical listing of all the business's accounts along with the running balance of each particular account. Other definition of ledger - also called as general ledger, it is a record of a business financial transactions. it summarize all the revenue and expenses of the business, plus the death owned and assets owned. ***FUNDAMENTAL CONCEPT*** a. ***Entity Concept -*** it is the most basic concept in accounting, an accounting entity is an organization or a section of an organization that stands apart from other organizations and individuals as a separate economic unit. Simply put, the transactions of different entities should not be accounted for together. Each entity should be evaluated separately. b. ***Periodicity Concept*** - an entity\'s life can be meaningfully subdivided into equal time periods for reporting purposes. it will be aimless to wait for the actual last day of operations to perfectly measures the entities profit. this concept allow the users to obtain timely information to serve as a basis on making decisions about future activities. for the purpose of reporting to outsiders, 1 year is the usual accounting period. c. ***Stable Monetary Unit Concept*** - the philippine peso is a reasonable unit of measure and that its purchasing power is relatively stable. it allows accountants to add and subtract peso amount as though each peso has the same purchasing power as any other peso at any time. This is the basis for ignoring the effect of inflation in accounting records. d. ***Going Concern*** - financial statements are normally prepared on the assumption that the reporting entity is going concern and will continue in operating for the foreseeable future. Hence, it is assumed that the entity has neither the intention nor the need to enter liquidation or to cease trading. this assumption underlies the depreciation of assets over their useful lives. *** CRITERIA FOR GENERAL ACCEPTANCE OF AN ACCOUNTING PRINCIPLE*** - A principle has ***[relevance]*** to the extent that is result in information that is meaningful and useful to those who need to know something about a certain organization. - A principle has ***[objectivity]*** to the extent that the resulting information is not influenced by the personal bias or judgment of those who furnish it. objectivity connotes reliability, trustworthiness and verifiability, which means that there is some way of finding out whether the information is correct. - A principle has ***[feasibility]*** to the extent that it can be implemented without undue complexity or cost. this criteria often conflict with one another. in some cases, the most relevant solution may be the least objective and the least feasibility. *** BASIC PRINCIPLE*** ***Objectivity Principle -*** accounting records and statements are based on the most reliable data available so that they will be as accurate and as useful as possible. reliable data or verifiable which they can be confirmed by independent observes. without this principle accounting records would be based on whims and opinions and is therefore subject to disputes. ***Historical Cost -*** this principle states that acquired assets should be recorded at their actual cost and not at what management things they are worth as at reporting date. ***Revenue Recognition Principle -*** revenue is to be recognized in the accounting period when goods are delivered or service are rendered or performed. ***Expense Recognition Principle -*** expenses should be recognized in the accounting period in which goos and services are used up to produce revenue and not when the entity pays for those goods and services. ***Adequate Disclosure -*** requires that all relevant information that would affect the users understanding and assessment of the accounting entity be disclosed in the financial statement. ***Materiality*** - financial reporting is only concerned with information that is significant enough to affect evaluation and decisions. materiality depends on the size and nature of the item george in the particular circumstances of its omission. in deciding whether an item or an aggregate of item is material, the nature and size of the item are evaluated together. depending on the circumstances, either the nature or the size of the item could be the determining factor. ***Consistency Principle*** - the firms should use the same accounting method from period to period to achieve comparability over time within a single enterprise. However, change or permitted if justifiable and disclose in the financial statement. *** ROLE OF ETHICS IN BUSINESS*** - ***Ethics*** is concerned with right and wrong and how conduct should be judged to be good or bad. Business ethics tells what is right or wrong in a business situation while professional ethics tell the same thing regarding profession. ethical conflict can arise, however, when what might be best for the company is wrong morally or professionally. - ***Ethical Dilemma*** is a situation in which there is no obvious right or wrong decision but rather a right or right answer. ***Some other ethical dilemmas follow:*** - white collar crime - with a blowing - conflicts of interest - fiduciary responsibilities - sexual harassment - discrimination *** FUNDAMENTAL PRINCIPLES*** ***Integrity -*** a professional accountant should be straightforward and honest in all professions and business relationship, integrity also implies fair dealing and truthfulness. ***Objectivity -*** a professional accountant should not allow bias, conflict of interest or undue influence of others to override professional or business judgements. ***Auditing -*** it is the accountancy professions most significant service to the public. an external audit is the independent examination that ensures the fairness and reliability of the reports that management submits to users outside the business entity. the result of the examinations is embodied in the *independent auditor's report.* * **Bookkeeping*** - it is a mechanical task involving the collection of basic financial data. the data are first entered in the accounting records or the book of accounts, and then extracted, classified and summarized in the form of income statement, balance sheet and cash flows statement. *[bookkeeping is a routine operation, while accounting requires the ability to examine a problem using both financial and non-financial data. ]* **Difference between bookkeeping and auditing** -auditors are unbiased specialists that evaluate financial statements, whereas bookkeeper are internal workers or external service providers who record and organized financial data. ***COST BOOKKEEPING, COSTING, COST ACCOUNTING*** **Cost bookkeeping** is the process that involves the recording of cost data in book of accounts. it\'s similar to bookkeeping except that data are recorded in very much greater detail **Cost accounting -** It makes use of those data once they have been extracted from the cost books in providing information for managerial planning and control. -cost accounting deals with the collection, allocation, and control of the cost of producing specific goods and services -Accountants are now discouraged from using the term ***costing*** unless it is qualified in some way, referring to some branch of costing (such as standard costing), but even so you will still find the term costing in general use. **Financial Accounting -** it focused on the recording of business transactions and the periodic preparation of reports on financial position and results of operation. Financial accounting is the more specific term applied to the preparation and subsequent publication of highly summarized financial information. **Financial Management -** it is a relatively new branch of accounting that has grown rapidly. Financial managers are responsible for setting financial objectives, making plans based on those objectives, obtaining the finance needed to achieve the plans, and generally safeguarding all the financial resources of the entity. **Management Accounting -** it incorporats cost accounting data and adapts them for specific decisions which management may be called upon to make. a management accounting system is on corporate all types of financial and non-financial information from a wide range of sources. **Taxation** - tax accounting includes the preparation of tax returns and the consideration of the tax consequences of proposed business transactions or alternative courses of action. As typically known, accountants involved in tax work or responsible for computing the amount of tax payable by both business entities and individual but their work is really more complex. - if tax expert attempt to reduce their clients tax liabilities strictly in accordance with the law, this is known as *[tax avoidance.]* - **tax avoidance** is a perfectly legitimate exercise, but tax evasion (the non declaration of sources of income on which tax might be due) is a very serious offense. **Government Accounting** - it is concerned with the identification of the sources and uses of resources consistent with the provisions of city, municipal, provincial or national laws. The government collects and spend huge amount of public funds annually so it is necessary that there is proper custody and disposition of these funds. **Reviewer for FAR** Lesson 2 **The Accounting Equation and the Double -- Entry System** ** *Information System*** *-* it is a collection of people, procedure, software, hardware, and data which work together to provide information essential to running an organization. ** PARTS OF AN INFORMATION SYSTEM** a. ***People*** - are competent end users working to increase their productivity. Ends users are used hardware and software to solve information related or decision making problems. b. ***Procedures*** - are manuals and guidelines that instruct end users on how to use the software and hardware. c. ***Software*** - it is the another name for programs - instructions that tell the computer how to process data. There are basically two kinds of software 1.)***System Software*** - it is the background software that helps a computer manage its internal resources. An example is the operating system. Window and Linux are popular operating system 2.) ***Application Software** -* it performs useful work on general purpose problems. The two types of application software are basic applications and advance application. **Basic Applications include:** *Browsers* -- navigate, explore, find information on the internet *Word processor* -- prepare written documents *Spreadsheet* -- analyze and summarize numerical data *Database management system* -- organize and manage data and information *Presentation graphics* -- communicate a message or pursued other people **Advance application include:** *Multimedia* -- integrate, music, voice, and graphic to create interactive presentations. *Web Publishers --* create interactive multimedia pages *Graphic Programs --* create professional publication, draw, edit and modify images. *Virtual reality --* create realistic three dimensional virtual or simulated environments. *Artificial intelligence --* simulated human thought processes and actions. *Project managers --* plan projects, schedule, people, and control resources d. ***Hardware*** - consists of input devices, the system, secondary storage, output devices, and communication devices. e. ***Input devices*** - translate data and program that human can understand into a form that computer can process. the more common are the keyboard, mouse, scanner, digital camera, and microphone. f. ***The system units*** - consist of electro electronic security with two parts: *Central Processing Unit (CPU) --* controls and manipulates data to produce information. *Memory (Primary Storage) --* temporarily holds data, program instructions, and processed data. g. ***Secondary Storage*** - it stores data in program. three most common storage media are: flash drive, hard disk, and optical disk. h. ***Output devices*** - an output processed information from the CPU. Two important outut devices are: monitor and printer. i. ***Communication Devices** --* these send and receive data and programs from one computer to another. A device that can connect a microcomputer to a telephone is a modern j. ***Data*** - it is the raw material for data processing. Data consist of numbers, letters, and symbols and relates to facts, events and transactions. Data describe something and is typically stored electronically in a life. A file is a collection of characters organized as a single unit. Common types of files are: document, worksheet, and database. ** ACCOUNTING INFORMATION SYSTEM** - it is the combination of personal, records and procedures that a business uses to meet its needed for financial information. ** TYPES OF ACCOUNTING INFORMATION SYSTEM** a. ***Computer Based Accounting System -*** a manual system rely on human processing so they are labor intensive and maybe inefficient in today\'s complex business environment. because manual system rely only one processing, they may be prone to error. - a computer based transaction system maintains accounting data separately from other operating data. That is, the accounting records are kept separately from the records required for the expenditures, revenue and conversion processes. **Advantages:** - transactions can be quickly posted to the appropriate accounts, bypassing the journalizing process. - detailed listing of transactions can be printed for reviews at any time. - a wide variety of reports can be prepared. b. ***Databased System*** - rational database system such as enterprise resource planning (ERP) depart from the "accounting information" method of organizing data. - database system reduce inefficiencies and redundancies that often exist in transaction based system. **Advantages:** a. the system recognizes business rather than just accounting events. b. the system supports reduction in operating inefficiencies. c. the system eliminates redundant data. ** STAGES OF DATA PROCESSING** - processing of raw data into useful accounting information then finally into summarize reports follows the usual ***[input -- processing -- output]*** **ELEMENTS OF FINANCIAL STATEMENTS** **Assets, Liabilities, and Equity** - relate to a reporting entities financial positions; and **Income and Expenses** - relate to a reporting entities financial performance. **Asset** - a pressure economic resources controlled by the entity as a result of past events. An economic resources is a right that has a potential to produce economic benefits. **Liability** - a present [obligation] of the entity to transfer an economic resources as a result of past events. **Equity** - the residual interest in the asset of the entity after deducting all its liabilities. **Income -** increases in assets, or increases in liabilities, that result in increases in equity, other than those relating to contributions from holders of equity claims. **Expenses** - decreases in assets, or increases in liabilities, that result in decrease in equity, other than those relating to distributions to holders of equity claims. ** DEBIT AND CREDITS -- DOUBLE-ENTRY SYSTEM** - an account is ***[debited]*** when an amount is entered on the left side of the account and **[credited]** when an amount is entered on the right side ** Dr** - the abbreviation for debit (from the latin debere) ** Cr** -- the abbreviation for credit (from the latin credere) +-----------------+-----------------+-----------------+-----------------+ | **BALANCE SHEET | | | | | ACCOUNTS** | | | | +=================+=================+=================+=================+ | **ASSETS** | **LIABILITIES | | | | | AND OWNER'S | | | | | EQUITY** | | | +-----------------+-----------------+-----------------+-----------------+ | Debit | Credit | Debit | Credit | | | | | | | (+) | (-) | (-) | (+) | | | | | | | Increases | Decreases | Decreases | Icreases | | | | | | | *Normal | | | *Normal* | | Balance* | | | | | | | | *Balance* | +-----------------+-----------------+-----------------+-----------------+ +-----------------------------------+-----------------------------------+ | **INCOME STATEMENT ACCOUNTS** | | +===================================+===================================+ | *Debit for decreases in owner's | *Credit for Increases in owner's | | equity* | equity* | | | | | **EXPENSES** | **INCOME** | +-----------------------------------+-----------------------------------+ **ACCOUNTS** +-----------------------------------+-----------------------------------+ | **Debit** | **Credit** | | | | | **[Increases in]** | **[Increases in]** | | | | | **Assets** | **Liabilities** | | | | | **Expenses** | **Owner's Capital** | | | | | **[Decreases in]** | **Infom** | | | | | **Liabilities** | **[Decreases in]** | | | | | **Owner's Capital** | **Assets** | | | | | **Income** | **Expenses** | +-----------------------------------+-----------------------------------+ ** NORMAL BALANCE OF AN ACCOUNT** - the normal balance of any account refers to the side of the account debit or credit where increases are recorded. Asset, owners withdrawal and expense accounts normally have debit balances; liability, owner\'s equity, and income accounts normally have credit balances. this result occur because increases in an account are usually greater than or equal to decreases. **ACCOUNTING EVENTS AND TRANSACTIONS** - an ***[account event]*** is an economic occurrence that causes changes in an enterprises, asset, liabilities, and/or equity. Events maybe internal actions, such as the use of equipment for the production of goods and services. it can also be an external event such as the purchase of raw materials from a supplier. - a ***[transaction]*** is a particular kind of event that involves the transfer of something of value between two entities. example of transactions include acquiring asset from owners, borrowing funds from creditor, and purchasing or selling goods and services. ** TYPES AND EFFECTS OF TRANSACTIONS** a. **Source of Assets (SA)** - an asset account increases and a corresponding claims (liabilities or owner's equity) account increases. **Ex:** (1) purchase of supplies on account; (2) sold goods on cash on delivery basis. b. **Exchange of Assets (EA)** - one asset account increases and another asset account decreases. **Ex:** acquired equipment for cash c. **Use of Assets (UA)** - an asset account decreases and a corresponding claims (liabilities or equity) account decreases. **Ex:** (1) Settled accounts payable; (2) Paid salaries of employees. d. **Exchange of Claims (EC)** -- (liabilities or owner's equity) accounting crisis and another claims (liabilities or owners equity) account decreases. **Ex:** received utilities bill did not pay Every accountable event has a dual but soft balancing effect on the accounting equation. Recognizing this event will not in any manner affect the equality of the basic accounting model. The four types of transaction above may be further expanded into nine types of effect as follows: 1. Increase in Assets = Increase in Liabilities (SA) 2. Increase in Assets = Increase in Owner's Equity (SA) 3. Increase in one Assets = Decrease in another Assets (EA) 4. Decrease in Assets = Decrease in Liability (UA) 5. Decrease in Assets = Decrease in Owner's Equity (UA) 6. Increase in Liabilities = Decrease in Owner's Equity (EC) 7. Increase Owner's Equity = Decrease in Liabilities (EC) 8. Increase in Liability = Decrease in another Liability (EC) 9. Increase in one Owner's Equity = Decrease in another Owner's Equity (EC) **TYPICAL ACCOUNT TITLES USED** **STATEMENT OS FINANCIAL POSITION** **Assets** - assets are should be classified only into two: current asset and non-current asset. ** Current Asset** **Cash** - cash is any medium of exchange that a bank will accept for deposit at face value. it includes coin, currency, checks, money orders, bank deposits and drafts. ***Cash Equivalent*** - these are short term, highly liquid investment that are rapidly convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. ***Notes Receivable*** - a note receivable is a written pledge that the customer will pay the business a fixed amount of money on a certain date. ***Accounts Receivable*** - there are claims against customers arising from sale of services or goods on credit. this type of receivable offers less security than a promissory note. ***Inventories*** - these are assets which are held for sale in the ordinary course of business; in the process of production for such sale; or in the form of materials or supplies to be consumed in the production process or in the rending of services. ***Prepaid Expenses*** - these are expenses paid for by the business in advance it is an asset because the business avoids having to pay cash in the future for specific expense. **Non -- Current Assets** ***Property, Plant and Equipment*** - these are tangible assets that are held by an enterprise for use in the production or supply of goods and services, or for rental to others, or for administrative purposes and which are expected to be used during more than one period. included or such items as land, building, machinery and equipments, furniture, fixtures, motor vehicles, and equipment. ***Accumulated Depreciation*** - it is a contra account that contains the sum of the periodic depreciation charges. the balance in this account is deducted from the cost of the related asset - equipment or buildings - top obtain book value. ***Intangible Assets*** - these are identifiable, non-monetary assets without physical substance held for use in the production or supply of goods or services, for rental to others, or for administrative purposes. This include goodwill, patents, copyrights, licenses, franchises, trademarks, brand names, secret processes, subscription list and non-competition agreements. **Liabilities** ** Current Liabilities** ***Accounts Payable*** - disappoint represent the reverse relationship of the accounts receivable. By accepting the goods or services, the buyer agree to pay for them in the near future. ***Notes Payable* -** a notes payable is like a note receivable but in reverse sense. In the case of a payable, the business entity is the maker of the note; that is, the business entity is the party who promises to pay the other party a specified amount of money on a specified future date. ***Accrued Liabilities*** - amounts owned to others for unpaid expenses. This account includes salaries payable, utilities payable, interest payable, and taxes payable. ***Unearned Revenues* -** When the business entity receives payment before providing its customers with goods or services, the amounts received are recorded in the unearned revenue account (liability method). When the goods or services are provided to the customer, the unearned revenue is reduced and income is recognized. ***Current Portion of Long-Term Debt*** - These are portions of mortgage notes, bonds and other long-term indebtedness which are to be paid within one year from the balance sheet date. ** Non-current Liabilities** ***Mortgage Payable*** - This account records long-term debt of the business entity for which the business entity has pledged certain assets as security to the creditor. In the event that the debt payments are not made, the creditor can foreclose or cause the mortgaged asset to be sold to enable the entity to settle the claim. ***Bonds Payable*** - Business organizations often obtain substantial sums of money from lenders to finance the acquisition of equipment and other needed assets. They obtain these funds by issuing bonds. The band is a contract between the issuer and the lender specifying the terms of repayment and the interest to be charged. **Owner's Equity** ***Capital*** - (from the Latin capitolis, meaning "property"). This account is used to record the original and additional investments of the owner of the business entity. It is increased by the amount of profit earned during the year or is decreased by a loss. Cash or other assets that the owner may withdraw from the business ultimately reduce it This account title bears the name of the owner. ***Withdrawals*** - When the owner of a business entity withdraws cash or other assets, such are recorded in the drawing or withdrawal account rather than directly reducing the owner's equity account. ***Income Summary*** - It is a temporary account used at the end of the accounting period to close income and expenses. This account shows the profit or loss for the period before closing to the capital account. **INCOME STATEMENT** ** Income** ***Service Income*** - Revenues earned by performing services for a customer or client; for example, accounting services by a CPA firm, laundry services by a laundry shop. ***Sales*** - Revenues earned as a result of sale of merchandise; for example, sale of building materials by a construction supplies firm. ** Expenses** ***Cost of Sales*** - The cost incurred to purchase or to produce the products sold to customers during the period; also called cost of goods sold. ***Salaries or Wages Expense*** - Includes all payments as a result of an employer-employee relationship such as salaries or wages, 13^th^ month pay, cost of living allowances and other related benefits. ***Telecommunications, Electricity, Fuel and Water Expenses*** - Expenses related to use of telecommunications facilities, consumption of electricity, fuel and water. ***Rent Expense*** - Expense for space, equipment or other asset rentals. ***Supplies Expense*** - Expense of using supplies (e.g. office supplies) in the conduct of daily business. ***Insurance Expense*** - Portion of premiums paid on insurance coverage (e.g. on motor vehicle, health, life, fire, typhoon or flood) which has expired. ***Depreciation Expense*** - The portion of the cost of a tangible asset (eg, buildings and equipment) allocated or charged as expense during an accounting period ***Uncollectible Accounts Expense*** - The amount of receivables estimated to be doubtful of collection and charged as expense during an accounting period ***Interest Expense*** - An expense related to use of borrowed funds