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AFM 191 — Financial Reporting & Managerial Decision Making 1

Private-company accounting from the first entry to a full statement set — 86 lessons

The whole of AFM 191 as the paper examines it: how the paper is marked and a fast track for learners with Grade-12 accounting, then the accounting equation, debits and credits, the cycle from journal to trial balance, accrual accounting and the adjusting entries, long-lived assets and their financing, closing the books and the classified statements, revenue and receivables under ASPE, merchandising and inventory costing, contribution margin and cost behaviour, cost-volume-profit, amortisation methods and disposals, liabilities and private-company equity, the cash flow statement, and a capstone that builds a full statement set from a trial balance. Every entry is built from a chart of accounts that includes the traps; every statement, schedule and CVP figure is a worksheet graded on the number; the questions the paper wants in prose are written and graded against a marking scheme.

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How This Course Is Examined

26 cards
  1. What an AFM 191 question actually looks like 8 min ◈ 5
  2. Where the marks are, line by line 9 min ◈ 6
  3. A diagnostic, and which modules you may skim 10 min ◈ 8
  4. The exam's real difficulty is reading under time 10 min ◈ 7

Why Accounting Exists, and the ASPE Frame

33 cards
  1. Identify, record, communicate — to whom? 7 min ◈ 5
  2. Owner-managers, the bank, the CRA, suppliers, employees, family investors 8 min ◈ 6
  3. Proprietorship, partnership, corporation; public vs private; IFRS vs ASPE 9 min ◈ 7
  4. Relevance, reliability, comparability, understandability — and the four assumptions 10 min ◈ 7
  5. Cost, matching, full disclosure, materiality, prudence; assets to losses 10 min ◈ 8

The Equation and the Four Statements

38 cards
  1. The equation, and the expanded equation 8 min ◈ 7
  2. Financing, investing, then operating — every one keeps it true 10 min ◈ 6
  3. Three statements from one worksheet; headings that say "for the month" or "at" 10 min ◈ 9
  4. Net income → RE → balance sheet; cash → the cash flow statement 9 min ◈ 8
  5. What an ASPE statement set contains — and what it need not 7 min ◈ 8

Recording: Debits, Credits, Journal, Ledger, Trial Balance

56 cards
  1. Debit is a side, not a direction 9 min ◈ 7
  2. Which accounts, which element, up or down, therefore which side 9 min ◈ 8
  3. Northlake’s December, first half 11 min ◈ 10
  4. Northlake’s December, second half 11 min ◈ 11
  5. From entries to balances to a list that must balance 10 min ◈ 8
  6. Forensics for one that does not balance; the cycle; source documents 9 min ◈ 12

Accrual Accounting and the Adjusting Entries

69 cards
  1. Why the bank wants accrual 8 min ◈ 6
  2. Deferrals and accruals, times revenue and expense, plus amortization 8 min ◈ 8
  3. Insurance by months, rent by months, supplies by the count 10 min ◈ 10
  4. Season passes, deposits, subscriptions — released by time or by work 9 min ◈ 9
  5. Straight-line, the contra account, the carrying amount 10 min ◈ 11
  6. Wages, interest, unbilled work — and the cash entry that follows 11 min ◈ 13
  7. The grid the explanation marks come from; then the statements 12 min ◈ 12

Buying and Financing Long-Lived Assets, Closing the Books, the Classified Statements

56 cards
  1. Capital or expense; land, improvements, building; the lump-sum split 10 min ◈ 10
  2. Part cash part loan; the note at maturity; the current portion 10 min ◈ 9
  3. Blended payments: interest on the opening balance, the rest to principal 10 min ◈ 6
  4. Four steps through Income Summary; dividends straight to retained earnings 10 min ◈ 10
  5. Current and non-current, liquidity order, contra accounts net, the first ratio 11 min ◈ 9
  6. Gross profit, operating income, other items, tax — and what the notes must say 10 min ◈ 12

Revenue, Receivables, and Cash Control

68 cards
  1. The criteria, and what is not revenue 9 min ◈ 8
  2. Point of sale, over time, deposits, rights of return 10 min ◈ 9
  3. Trade discounts never recorded; cash discounts by the gross method; net sales 10 min ◈ 11
  4. Why direct write-off breaks matching; the income-statement approach ignores the balance 9 min ◈ 9
  5. Target the ending allowance; the existing balance — credit or debit — matters 12 min ◈ 9
  6. No expense on write-off; reinstate then collect; a note by days 11 min ◈ 13
  7. Bank side, book side, one true balance; entries for the book side only 11 min ◈ 9

Merchandising, Inventory, and Cost of Goods Sold

61 cards
  1. The merchandiser’s income statement; what each system records and when 8 min ◈ 7
  2. Inventory absorbs freight-in; discounts reduce cost, and never apply to freight 10 min ◈ 8
  3. Two entries per sale; returns restore inventory; goods in transit and consignments 10 min ◈ 10
  4. Purchases, freight-in, returns and discounts; COGS = opening + net purchases − closing 9 min ◈ 7
  5. Oldest layers out first; ending inventory is the newest cost; the same answer under both systems 11 min ◈ 8
  6. Recompute at every purchase, never at a sale; carry the decimals 11 min ◈ 8
  7. Write down item by item through cost of goods sold; an ending error flips next year; one ratio 11 min ◈ 13

Cost Behaviour and the Contribution-Margin Statement

47 cards
  1. Variable, fixed, and the per-unit trap 8 min ◈ 8
  2. When the straight line holds; picking the driver 8 min ◈ 7
  3. Northlake’s season as fixed + variable per skier-day × skier-days 9 min ◈ 6
  4. Two observations, picked by activity, give the line 9 min ◈ 9
  5. What each skier-day contributes toward fixed costs 9 min ◈ 8
  6. Same bottom line as the functional statement; only this one answers "what if" 10 min ◈ 9

Cost-Volume-Profit Analysis

61 cards
  1. Operating income = (price − VC) × units − FC, drawn 8 min ◈ 7
  2. FC ÷ CM per unit; FC ÷ CM ratio; round units up; prove it 10 min ◈ 10
  3. Add the target to fixed costs; gross up an after-tax target first 10 min ◈ 7
  4. How far sales can fall; what a price, VC or FC change does to break-even 11 min ◈ 10
  5. Automation, a special order, an ad campaign — decide on contribution margin 11 min ◈ 10
  6. A blended CM ratio; the composite unit; a mix shift moves break-even 11 min ◈ 7
  7. What the model assumes; how the answer is written for the owner 9 min ◈ 10

Retained Earnings, Current Assets, and Long-Lived Assets: Amortisation, Disposal, Impairment, Intangibles

85 cards
  1. What moves RE; the top half of the balance sheet; the amortisation words 9 min ◈ 9
  2. Time-based versus use-based; the schedule 10 min ◈ 10
  3. Twice the straight-line rate on carrying amount; the final-year plug; same total, different timing 11 min ◈ 10
  4. Nearest month or half-year — a policy; a revision changes the future only 10 min ◈ 8
  5. Capitalise what improves; expense what maintains; show cost less accumulated by class 8 min ◈ 8
  6. Amortise to the date; remove cost and accumulated; record proceeds; plug the gain or loss 11 min ◈ 12
  7. Scrap fully amortised or early; exchange at fair value; the two-step test with no reversal 12 min ◈ 13
  8. Finite life amortised; indefinite not; development is a policy choice; goodwill only when bought 10 min ◈ 15

Liabilities and the Equity of a Private Corporation

79 cards
  1. The one-year test; the three families; the accrual side seen from the liability 8 min ◈ 9
  2. Tax collected is not revenue; gross pay is the expense; the employer’s share 10 min ◈ 13
  3. A note straddling year end; maturity with the accrual cleared; the loan schedule’s next row 10 min ◈ 11
  4. Estimate at the sale; true up the tax; accrue when likely and estimable 11 min ◈ 14
  5. Authorised, issued, outstanding; no par value; shares for cash and for assets 9 min ◈ 9
  6. Declaration creates the liability; the record date is silent; payment clears it 10 min ◈ 11
  7. Both sides in order, with the ratio the bank reads, and why the owner cares about the split 10 min ◈ 12

The Cash Flow Statement, Indirect Method

48 cards
  1. What the statement answers; three activities; ASPE’s classification; cash equivalents 8 min ◈ 7
  2. Start from net income; add back amortization; remove the gain, add back the loss 10 min ◈ 8
  3. An increase in a current asset uses cash; an increase in a current liability provides it; two exclusions 11 min ◈ 8
  4. T-accounts for Equipment and Accumulated Amortization; the purchase hidden behind the disposal 11 min ◈ 8
  5. Loans raised and repaid, shares issued, dividends paid; the note for what never touched cash 9 min ◈ 7
  6. Three sections to one net change that reconciles to the balance sheet; then the four questions 11 min ◈ 10

Capstone: A Full Statement Set from a Trial Balance

56 cards
  1. All five families at once, plus the adjustment the facts only imply 12 min ◈ 17
  2. Multi-step for a company with both sales and service revenue; then the RE bridge 10 min ◈ 7
  3. Every contra netted, the current portion split, the intangible placed, the equity tied 11 min ◈ 10
  4. The integrating step: indirect operating cash flow from the statements you just built; then close 12 min ◈ 12
  5. The policy paragraph, in the register of the paper; the timing plan for a case exam 10 min ◈ 10
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