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ACCA Financial Management

Instructions:
  • Answer 50 questions in 15 minutes.
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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. [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).






2. The system of accounting that recognizes revenues when cash is received and expenses when cash is paid out. See also Accrual basis of accounting.






3. A measure of the resources used to generate revenue and/or provide a service. Often used synonymously with costs. See also Costs.






4. Amounts earned by the organization from the provision of service or sale of goods.






5. A legal obligation to pay the holder of the note or lien.






6. [(cash + marketable securities)/current liabilities). A liquidity ratio that measures how much cash and marketable securities are available to payoff all current liabilities.






7. 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.






8. The income (operating revenues -operating expenses) earned in non-health-care related activities.






9. [(excess of revenues over expenses + interest expense + depreciation expense)/(interest expense + principal payments))- A ratio that measures an organization's ability to pay back a loan. In for-profit organizations - it is calculated as: (net income






10. Demonstrates the ability to pay off long term debt






11. Costs that stay the same in total over the relevant range as volume increases - but that change inversely on a per unit basis.






12. Costs not traced to a cost object - but that must eventually be allocated across cost objects. See also Direct costs.






13. One of the four major financial statements. It answers the question: Where did our cash come from and where did it go during the accounting period?






14. Assets = Liabilities + Net Assets (aka Equity).






15. [Surplus/Operating Revenues]






16. Financing that will be paid back in less than one year.






17. Responsibility centers responsible for making a certain return on investments.






18. Service center costs are allocated to both mission centers and other service centers






19. A method by which the organization develops its strategies and budgets to meet future financial targets.






20. The cost of a capital asset (i.e. building or equipment) minus accumulated depreciation.






21. A benefit paid for in advance (rent - insurance - etc.). Also called prepaid expense.






22. Price times total quantity.






23. A balance sheet account that estimates the total amount of customer accounts receivable that will not be collected. It is also called allowance for bad debts and allowance for doubtful accounts.






24. Decisions regarding the relative amount of debt and equity used to finance the organization's non-current assets.






25. The rise in an economy's general level of prices.






26. Traces indirect costs to activity that uses them. Overhead collected in pools and distributed to cost object by cost drivers.






27. The elapsed time between financial statements. Common accounting periods






28. Looks at the percentage change in a line item's value from one year to the next using the formula: [(subsequent year -base year)/base year) x 100. See also Vertical analysis.






29. Ratios that measure how the organization's assets are financed and/or whether the organization can take on new debt.






30. Capital investment decisions designed to increase an organization's strategic position.






31. Recording expenses associated with making revenue at the same time as revenues are recognized






32. Market value. The price at which something - such as bonds and stocks - could be bought or sold today on the open market.






33. 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






34. A note payable that has as collateral real assets and that requires periodic payments.






35. The changes in cash resulting from the normal operating activities of the organization.






36. What a series of equal payments in the future is worth today taking into account the time value of money.






37. Current assets. Net working capital equals current assets –current liabilities.






38. When products are manufactured in batches in different sizes - and overhead activities are affected by the size of the batch being produced






39. Assets that provide service for a period exceeding one year. Sometimes referred to as long-term assets.






40. The balance sheet category that includes actual money on hand as well as money equivalents - such as savings and checking accounts. It excludes cash restricted as to its use for something other than current operations.






41. Portion of the profits the organization keeps in-house to use in support of its mission.






42. Internal rate of return. The percentage return on an investment. It is the rate of return at which the net present value equals zero. Often used as a comparison to cost of capital.






43. Generally - assets that will be used or consumed within one year. Some organizations use a period of less than one year.






44. A transaction that reduces the risk of an investment.






45. (tax exempt revenue bonds)- Bonds in which the interest payments to the investor are exempt from the IRS. These bonds must be issued by an organization that has received tax exemption from the IRS and be used to fund projects that qualify as "exempt






46. That point at which total revenues equal total costs. It is described by the equation: (price x volume) = fixed costs + (variable cost per unit x volume).






47. Agencies that assess the "credit worthiness" of an organization. The two major rating agencies are Moody's and Standard & Poor.






48. [(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






49. Organizational units responsible for providing services and controlling their costs. There are two major types: clinical cost centers and administrative cost centers.






50. Opposite of the authoritarian approach. The roles and responsibilities of the budgeting process are diffused throughout the organization. Often called the participatory approach.