What an AFM 191 question actually looks like

The paper is a story about a small company

Every AFM 191 exam question starts the same way: a paragraph about a small Canadian private company, a sentence saying it applies ASPE, and a year end. Then come the sub-questions. No multiple choice is evidenced on any paper on file. You write entries, complete statements, compute a figure and explain a choice — on the response paper, with a non-programmable calculator, and with an ASPE guidance appendix printed on the question paper for lookup.

Here is what one looks like, built for this course. Read it the way you will read the real thing: once for what happened, once for what is being asked.

Worked example — one full mini-case

> Northlake Nordic Centre Inc. operates a cross-country ski and trail centre near Huntsville, Ontario, and applies ASPE. Its year end is 31 December 2025. On 1 September 2025 it borrowed $60,000 from its bank on a two-year note at 6 % per year; interest is payable at maturity. On 15 November it sold $30,000 of season passes for the December–March season, all for cash. On 20 December it received a $2,400 hydro bill for December, which it paid on 8 January 2026. At 31 December it held cash of $19,700, accounts receivable of $6,200 and supplies of $1,100. > > Required: > (a) Record the note, the pass sales and the hydro bill. (6 marks) > (b) Complete the current assets section of the balance sheet at 31 December 2025. (3 marks) > (c) Compute the interest accrued on the note at 31 December 2025. (2 marks) > (d) Which statement or statements change when the hydro bill is recorded, and why? (3 marks)

Four sub-questions, four different skills, fourteen marks. Here is what each one is really asking.

(a) Record — six marks, three entries. The marker is looking for the right account and side on every line. The note is Dr Cash 60,000 / Cr Notes Payable 60,000. The season passes are Dr Cash 30,000 / Cr Unearned Revenue 30,000 — cash arrived, but not one day of skiing has been delivered, so it is a liability, not revenue. The hydro bill is Dr Utilities Expense 2,400 / Cr Accounts Payable 2,400 — the expense belongs to December whether or not the cheque has been written. Two of the three entries carry a trap, and that ratio is typical.

(b) Complete a statement — three marks. Current assets, in liquidity order: Cash 19,700 · Accounts receivable 6,200 · Supplies 1,100 · Total current assets 27,000. One mark per line in the right order, one for the subtotal. Notice that the $30,000 of passes is not here — it is a liability.

(c) Compute — two marks. Interest accrued = $60{,}000 \times 6\,\% \times \frac{4}{12} = \$1{,}200$ (September to December is four months; the day-count convention in this course is months ÷ 12 unless a question says days ÷ 365). The narrative said interest is payable at maturity — that tells you when the cash moves, not when the expense is incurred. Accrue it.

(d) Explain — three marks. "The income statement changes: utilities expense rises 2,400 so net income falls 2,400. The balance sheet changes: accounts payable rises 2,400 and, through net income, retained earnings falls 2,400. The reason is that the expense was incurred in December when the power was used, so it is matched to December regardless of the January payment." Statement, direction, reason — every explanation mark on this paper has that shape.

The four instruments

Those four sub-questions are the whole course. Every lesson rehearses them with the block that matches: a journal block for (a), a numeric worksheet for (b), a numeric single value for (c), and an exam block with a rubric for (d). Multiple choice appears only as a warm-up, the way Top Hat questions do in the course itself.