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Test your basic knowledge |
ACCA Financial Management
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Subjects
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certifications
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business-skills
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acca
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
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Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The budget format that lists revenues and expenses by category - such as labor - travel - and supplies. Categories are sometimes broken down into sub-categories. See also Performance budget and Program budget.
Line-item budget
Statement of operations
Fixed supplies budget
Decentralization
2. (excess of revenues over expenses/net assets)- In not-for-profit health care organizations - it measures the rate of return for each dollar in net assets. In for-profit organizations - it measures the rate of return for each dollar in owners' equity;
Perpetuity
Cost object
Top-down budgeting
Return on net assets
3. The elapsed time between when the patient or third-party payor sends the payment and the time the health care provider receives the payment.
Mail float
Quick ratio
Accrual basis of accounting
Opening inventory
4. An assignment or grading of the likelihood that an organization will not default on a bond.
Bond rating
Matching principle
Program budget
Final cost object
5. The method of capital budgeting that compares the cash flows resulting from continuing with the existing alternative to those that would result if the equipment were replaced.
Effectiveness
Comparative approach
Float
Asset Turnover Ratio
6. A statistic used to allocate costs from a cost center based on a cause and effect relationship. For example - a common allocation base to allocate the costs of maintaining medical records is number of visits. See also Cost driver.
ROI
Expense cost variance
Allocation base
ABC
7. The system of accounting that recognizes revenues when cash is received and expenses when cash is paid out. See also Accrual basis of accounting.
Activity ratios
Accumulated depreciation
Other expenses
Cash basis of accounting
8. Traces indirect costs to activity that uses them. Overhead collected in pools and distributed to cost object by cost drivers.
Activity Based Costing
Lease
Net proceeds from a bond issuance
Periodic payments
9. A security interest in one or more assets granted to lenders in a secured loan.
Equity financing
Lien
Discount rate
Acid test ratio
10. The amount of inventory on hand at the beginning of an accounting period. See also Ending inventory.
Statement of operations
Beginning inventory
Leverage
Current ratio
11. Non-operating income.
Increase in unrestricted net assets
Other income
Revenue rate variance
Interest
12. The method by which to distribute service center costs to mission centers; in general the one that most accurately measures use by the cost centers that receives its services (food service - # of meals - hospital laundry - # of pounds processed)
Basis of Allocation
Fixed supplies budget
Not-for-profit
Current liabilities
13. Health maintenance organization. Entities that receive premium payments from enrollees with the understanding that the HMO will be financially responsible for all predefined health care required by its enrollees for a specified period of time. The he
Non-current liabilities
Beginning inventory
HMO
Cash and cash equivalents
14. Portion of the profits the organization keeps in-house to use in support of its mission.
Short-term financing
Cost of capital
Retained earnings
Operating expenses
15. Cash flows that have been adjusted to their present value to account for the cost of capital (over time) and the time value of money.
Increase in unrestricted net assets
Strategic financial planning
Fixed assets
Discounted cash flows
16. Being subject to sanctions with respect to carrying out responsibilities.
Accountability
Interest
Statement of operations
Net assets to total assets
17. Assets minus Liabilities. One of the three major categories on the balance sheet. Traditionally known as stockholders' equity in investor-owned organizations and fund balance in not-for-profit organizations. In not-for-profit health care organization
Assets
Compounding
Net Assets
Accounts payable
18. Organizational units responsible for providing services and controlling their costs. There are two major types: clinical cost centers and administrative cost centers.
Cost
Cost centers
ROI
Tax-exempt bonds
19. Amounts the organization is obligated to pay others - including suppliers and creditors.
Restricted donation
Precautionary purposes
Capital assets
Accounts payable
20. The delay between providing the service and getting the bill to the patient or third party. There are two aspects of billing float: assembling the bill and delivering the bill to the patient or third-party payor.
Performance measure
Billing float
Accumulated depreciation
Float
21. The resources owned by the organization. It is one of the three major categories on the balance sheet.
Accrued expenses
Coupon
Assets
Net patient service revenue
22. [Total Revenues/ Total Assets]
Profit margin
Co-payments
Retained earnings
Asset Turnover Ratio
23. Any product - service - customer - contract - project - process or other work unit for which a separate cost measurement is desired.
MV
Fixed asset turnover
Cost object
Expense cost variance
24. [Surplus/Operating Revenues]
Dividends
Profit margin
Net patient service revenue
Cost centers
25. [Total Revenues/(Net Fixed Assets)]. This ratio measures the number of dollars generated for each dollar invested in an organization's fixed assets (i.e. plant and equipment).
Issuer
Profitability ratios
Volume diversity
Fixed Asset Turnover
26. The section of the expense budget that forecasts the cost of those supplies that will not vary as a direct result of changes in the amount of services provided (such as administrative office supplies).
Effectiveness
Clinical cost centers
Current ratio
Fixed supplies budget
27. Organizational units primarily responsible for providing services and earning a profit based on the health care services provided.
Traditional profit centers
Long-term debt to net assets ratio
Other revenues
Market rate of interest
28. The amount of inventory on hand at the end of an accounting period. See also Beginning inventory.
Inflation
Ending inventory
Operating revenues
Capital appreciation
29. A measure of the income earned from operating activities. It is calculated as: unrestricted revenues - gains - and other support -expenses and losses.
Cost centers
Working capital
Non-operating income
Operating income
30. A method of allocating costs that are not directly paid for (utilities - rent - administration) into those products or services to which payment is attached (day of care - a brief visit). See also Activity-based costing.
Net Assets
Cost of goods sold
Step-down method
Permanently restricted net assets
31. [total revenues/total assets].- This ratio measures the overall efficiency of the organization's assets to produce revenue. It answers the question: For every dollar in assets - how many dollars of revenue are being generated?
Float
Collections policies and procedures
Total asset turnover
Cost centers
32. A series of equal cash flows made or received at regular time intervals. Ordinary annuities occur at the end of each period whereas annuities due occur at the beginning of each period.
Annuity
Ending inventory
Debt to equity
Other support
33. [current assets/current liabilities].- This liquidity ratio measures the proportion of all current assets to all current liabilities to determine how easily current debt can be paid off. It is one of the most commonly used ratios.
Current ratio
Interest
Statement of cash flows
Perpetuity
34. The total amount of multiyear debt due in future years.
Accrual basis of accounting
Long-term debt - net of current portion
Return on net assets
Intermediate Cost Object
35. The unit of service which we wish to know the cost for (hospital admission - classroom hour - course - etc.)
Final cost object
Expense cost variance
Average Days Inventory
Accumulated depreciation
36. Activities that provide guidance and feedback to keep the organization within its budget - such as staff meetings - regular reports - and bonuses.
Periodic payments
Donation
Controlling activities
Tangible assets
37. An organization whose profits can be distributed outside the organization and must pay taxes. Also called investor-owned organizations.
ROI
For-profit
Operating expenses
Cash equivalents
38. [(excess of revenues over expenses + interest expense)/interest expense].- This ratio enables creditors and lenders to evaluate an organization's ability to generate earnings necessary to meet interest expense requirements. In for-profit organization
Capital structure ratios
Float
SWOT analysis
Times interest earned
39. I) Calculating interest using the compound interest method. 2) Adjusting for the time value of money forward in time to a future value. See also Compound interest method and Discounting.
Compounding
Loan amortization schedule
Mail float
Mortgage bonds
40. The process of distributing service center costs to mission centers - to determine the full cost of each mission center
Top-down/bottom-up approach
Certainty
Allocation
Book value
41. Revenue is recorded when goods or services are delivered
Bad debt
Realization principle
Amortization of a loan
Parent organization
42. Financial and non-financial standards against which organizational performance is measured.
Net patient service revenue
Performance measure
Accrual basis of accounting
For-profit
43. 1) The resources used to produce a good or service. 2) The amount of cash given up in a transaction. 3) Price. The first definition is based on accrual accounting and the second on cash accounting.
Final cost object
Cash flows from operating activities
Cost
Mission statement
44. Tools used to increase the amount of cash available to the organization. The objective of billing - credit - and collection policies is to accelerate cash receipts; the objective of cash disbursement policies is to slow down cash outflows.
Accrued expenses
Final cost object
Billing - collections - and disbursement policies and procedures
Long-term investments
45. The cash flows derived from an organization's operating activities.
Capital structure ratios
Operating cash flows
Statement of changes in net assets
Lien
46. A method by which the organization develops its strategies and budgets to meet future financial targets.
Strategic decisions
Strategic financial planning
Issuer
Operating expenses
47. [Net Assets/Total Assets]. This ratio reflects the proportion of total assets financed by equity.
Long-term debt - net of current portion
Net Assets to Total Assets
Restricted donation
Operating cash flows
48. Operating income plus other income. This is analogous to net income before taxes in for-profit entities.
Excess of revenues over expenses
Expansion decisions
Lender
Statement of cash flows
49. [(cash + marketable securities)/current liabilities). A liquidity ratio that measures how much cash and marketable securities are available to payoff all current liabilities.
Cost of capital
Acid test ratio
Excess of revenues over expenses
Mission Center
50. The category of assets summarizing the amount of the major capital investments of the facility in plant - property - and equipment (PP&E). Plant means buildings - property is land - and equipment includes a wide variety of durable items from beds to
Leverage
Basic accounting equation
Accumulated depreciation
Properties and equipment