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ACCA Financial Management

Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • 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 plant & equipment]- This ratio measures the number of dollars generated for each dollar invested in an organization's plant and equipment.






2. Highly liquid current assets such as interest-bearing savings and checking accounts.






3. [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?






4. 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.






5. Directly related to the purposes of the organization and the delivery of services






6. [(actual volume -budgeted volume) x budgeted cost per unit).- The portion of total variance that is due to actual volume being either higher or lower than budgeted volume. It is the difference between the expenses forecast in the original budget and






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






8. An entity that temporarily grants the use of money or an asset to another in return for compensation - usually in the form of interest.






9. The budget that forecasts the operating and - in some cases - the non- operating revenues that will be earned during the budget period.






10. A contract in which the lessee (user) agrees to pay the leassor (owner) a specific amount over a period of time for the use of an asset.






11. [(cash + marketable securities + net accounts receivable)/current liabilities)- A measure of the organization's liquidity.






12. Cash inflows and outflows resulting from financing activities - such as obtaining grants or endowments - or from borrowing or paying back long-term debt.






13. The process of adjusting for the time value of money backward in time to present value. See also Compounding.






14. One of the four major financial statements. It summarizes the organization's revenues and expenses during an accounting period as well as other items that affect its unrestricted net assets. It is analogous to - but different from - an income stateme






15. Stated interest rate on a bond - as promised by the issuer.






16. A category of income that includes unrestricted interest - dividends - and gains from the sale of unrestricted investments.






17. The unit of service which we wish to know the cost for (hospital admission - classroom hour - course - etc.)






18. 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).






19. [Total Liabilities/ Net assets]






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






21. Debt to be paid off in a period longer than one year.






22. The amount of the total revenue variance that occurs because the actual average rate charged varies from that originally budgeted. It can be calculated using the formula: (actual rate -budgeted rate) x actual volume.






23. Amounts due to the organization from patients - third parties - and others.






24. The section of the statement of cash flows that reports the total change in cash and cash equivalents over the accounting period.






25. The organization's legal obligations to pay its creditors. Liabilities are classified as current and non-current. Liabilities are one of the three major categories on the balance sheet and are part of the fundamental accounting equation.






26. Costs that are traced to a cost object. See also Indirect costs and Cost object.






27. Properties and equipment less accumulated depreciation.






28. (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;






29. An organization whose profits can be distributed outside the organization and must pay taxes. Also called investor-owned organizations.






30. The ease and speed with which an asset can be turned into cash.






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






32. The amount expected to be collected from payors. It is calculated as: gross accounts receivable – discounts and allowances – allowance for un-collectibles.






33. The process of distributing service center costs to mission centers - to determine the full cost of each mission center






34. Bonds that hold the health care provider's real property and equipment as security or collateral in case of default.






35. 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.






36. A budget in which line items are presented by program.






37. The ability of an organization to find new ways to operate that obviate the need for certain classes of costs - such as doing procedures on an outpatient rather than inpatient basis.






38. Organizational units responsible for their own costs that provide administrative support to other organizational units or the organization






39. The amount of time between when an organization receives a service and pays for it.






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






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






42. [long-term debt/net assets]- A measure of the proportion of an organization's assets that are financed by debt as opposed to equity. In for-profit organizations - it is called the long-term debt to equity ratio and is calculated using the formula [lo






43. 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?






44. Non-operating income.






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






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






47. The difference between the initial amount paid for an investment and the related future cash inflows after they have been adjusted (discounted) by the cost of capital.






48. The bottom line in the statement of operations. It includes such items as operating and non-operating income - contributions of long-lived assets - transfers to parent - and extraordinary items.






49. Revenues of the organization earned in non-healthcare related activities.






50. If a project is undertaken - these cash flows are the indirect increases or decreases in cash flows that will occur elsewhere in the organization.