The funds of Lake City include a debt service fund, a capital projects fund, and an internal service fund.

Required

Explain the use of debt service funds. Include what they account for, the basis of accounting used, unusual entries and accounts, and their financial statements.

Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2013, are provided with all new textbooks. This material also is available at http://www.airfranceklm-finance.com . Required: 1. What amounts did AF report for the following items for the year ended December 31, 2013? a. Total revenues b. Income from current operations c. Net income or net loss (AF equity holders) d. Total assets e. Total equity 2. What was AF’s basic earnings or loss per share for the year ended December 31, 2013? 3. Examine Note 4.1.1 of AF’s annual report. What accounting principles were used to prepare AF’s financial statements? Under those accounting principles, could AF’s financial information differ from that of a company that exactly followed IFRS as published by the IASB? Explain.

Use the accounting forms and financial statements from the previous exercise to complete this problem. General journal pages are given in the Working Papers.

Instructions:

1. For the current year, journalize the closing entries using page 13 of a general journal.

All of the following are examples of managerial accounting activities except ________.

A. preparing external financial statements in compliance with GAAP

B. deciding whether or not to use automation

C. making equipment repair or replacement decisions

D. deciding whether or not to use automation

Suppose you are starting a business, Wholly Shirts, to imprint logos on T-shirts. In organizing the business and setting up its accounting records, you take your information to a CPA to prepare financial statements for the bank. You state to the CPA, “Ireally need to get this loan, so be sure you make my financial statements look great.” Requirement

1. Name the organization that governs the majority of the guidelines that the CPA will use to prepare financial statements for Wholly Shirts.

The financial statements of M&S are presented in Appendix E. The company's complete annual report, including the notes to the financial statements, is available online.

Instructions

Refer to M&S's financial statements and the accompanying notes to answer the following questions.

a. Were there changes in accounting policies reported by M&S during the two years covered by its income statements (2016-2017)? If so, describe the nature of the change and the year of change.

b. What types of estimates did M&S discuss in 2017?

The allowance method of accounting for uncollectible accounts receivable involves the creation of a contra account that shows theestimated amount of uncollectible receivables. Why would financial statement users want to know both this number and the gross amount of accounts receivable?

Suppose a firm is considering a new project that requires an initial investment and has equal sales and costs over its life. Will the project reach the accounting, cash, or financial break-even point first? Which will it reach next? Last? Will this ordering always apply?

As part of the year-end audit, you are discussing the disclosure checklist with your client. The checklist identifies the items that must be disclosed in a set of GAAP financial statements. The client is surprised by the disclosure item related to accounting policies. Specifically, since the audit report will attest to the statements being pre- pared in accordance with GAAP, the client questions the accounting policy checklist item. The client has asked you to conduct some research to verify the accounting policy disclosures.

Instructions

If your school has a subscription to the FASB Codification, log in and prepare responses to the following. Provide Codification references for your responses,

a. In general, what should disclosures of accounting policies encompass?

b. List some examples of the most commonly required accounting policy disclosures.

Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization’s business activities. Classify the following activities as part of the identifying (I), recording (R), or communicating (C) aspects of accounting

_______1. Analyzing and interpreting reports. _______2. Presenting financial information. _______3. Keeping a log of service costs. _______4. Measuring the costs of a product. _______5. Preparing financial statements. _______6. Seeing revenues generated from a service. _______7. Observing employee tasks behind a product. _______8. Registering cash sales of products sold.

The amount of income taxes due to the government for a period of time is rarely the amount reported on the income statement for that period as income tax expense.

a. Explain the objectives of accounting for income taxes in general-purpose financial statements.

b. Explain the basic principles that are applied in accounting for income taxes at the date of the finan cial statements to meet the objectives discussed in (a).

c. List the steps in the annual computation of deferred tax liabilities and assets.

Access the FASB Accounting Standards Codification at the FASB website ( asc.fasb.org ). Determine the specific citation for accounting for each of the following items: 1. Requirements to disclose within the financial statements the pertinent rights and privileges of the various securities outstanding. 2. Requirement to record a “small” stock dividend at the fair value of the shares issued. 3. Requirement to exclude from the determination of net income gains and losses on transactions in a company’s own stock.

In examining the costs of pension plans, Helen Kaufman, CPA, encounters certain terms. The components of pension costs that the terms represent must be dealt with appropriately if generally accepted accounting principles are to be reflected in the financial state ments of entities with pension plans.

a. 1. Discuss the theoretical justification for accrual recognition of pension costs.

2. Discuss the relative objectivity of the measurement process of accrual versus cash (pay-as-you go) accounting for annual pension costs.

b. Explain the following terms as they apply to accounting for pension plans.

1. Market-related asset value.

2. Projected benefit obligation.

3. Corridor approach.

c. What information should be disclosed about a company's pension plans in its financial statements and its notes?

Discuss whether Colston Company correctly reported the following items in the financial statements:

b. In a recent year, the company voluntarily changed its method of accounting for long-term construction contracts from the percentage of completion method to the completed contract method. Both methods are acceptable under generally accepted accounting principles. The cumulative effect of this change was reported as a separate component of income in the current period income statement.