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ACCA Financial Management
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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. Bonds that have received a rating ranging from AM to BBB (at S&P) - or Aaa to Bbb (Moody's) - of which the highest are called quality ratings.
Fixed (interest) rate debt
Non-operating ratio
Investment grade
Spillover cash flows
2. [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
Non-operating income
Liabilities
Long-term debt to net assets ratio
Debt to equity
3. [Total assets/Net Assets]
Leverage
Properties and equipment - net
Allocation
Other income
4. The bottom area of the financial statements that contains key information not available in the body of the statements - such as how charity is determined - the composition of investments - which assets are restricted - and the depreciation method.
Accountability
Profitability ratios
Mutually exclusive projects
Footnotes
5. Activity-based costing. A method to determine the costs of a service - product - or customer by tracing the resources consumed. ABC focuses on: I) controlling as well as calculating costs - 2) tracing as opposed to allocating costs - and 3) the impor
Opportunity cost
ABC
Investment centers
Present value of an annuity
6. Assets = Liabilities + Net Assets (aka Equity).
Net proceeds from a bond issuance
Basic accounting equation
Asset Management ratios
Operating budget
7. Cash inflows and outflows resulting from financing activities - such as obtaining grants or endowments - or from borrowing or paying back long-term debt.
Accounting period
Budget
Times interest earned
Cash flows from financing activities
8. Supplementing traditional sources of revenue with new sources.
Revenue enhancement
Net increase (decrease) in cash and cash equivalents
Expense budget
Deferred revenues
9. A measure of the income earned from operating activities. It is calculated as: unrestricted revenues - gains - and other support -expenses and losses.
Lien
Mortgage
Operating income
Controlling activities
10. The process of distributing service center costs to mission centers - to determine the full cost of each mission center
Allocation
Net present value
Coupon rate
Other expenses
11. I) Organizations that have a special designation because they provide goods or services that result in needed community benefit. In turn - such organizations are not required to pay most taxes. 2) The designation of an organization as one that is not
Collections policies and procedures
Annuity
Not-for-profit
Step-down method
12. A method by which the organization develops its strategies and budgets to meet future financial targets.
Long Term Solvency ratios
Total asset turnover
Statement of operations
Strategic financial planning
13. The costs of a service after taking into account its direct and fair share of allocated costs.
Cash budget
Collateral
Fully allocated costs
Inflation
14. The cost of a capital asset (i.e. building or equipment) minus accumulated depreciation.
Common costs
Permanently restricted net assets
Accrued expenses
Book value
15. A legal obligation to pay the holder of the note or lien.
Notes payable
Common costs
Operating margin
Step-down method
16. What a series of equal payments in the future is worth today taking into account the time value of money.
Present value of an annuity
Net proceeds from a bond issuance
Discounted cash flows
Operating margin
17. The current traded rate for similar risk securities.
IRR
Cash and cash equivalents
Program budget
Market rate of interest
18. The budget that forecasts the operating and - in some cases - the non- operating revenues that will be earned during the budget period.
Revenue budget
Liquidity ratios
Long-term debt to net assets ratio
Allocation base
19. The cost of activities that take place to produce the final cost object
Average Days Inventory
Prepaid assets
Top-down/bottom-up approach
Intermediate Cost Object
20. When different products use overhead related services in different proportions - and when the costs of those services are significantly different - The situation present when products consume overhead in different proportions.
Mission Center
Product diversity
Fixed assets
Debt to equity
21. The changes in cash resulting from the normal operating activities of the organization.
Cash flows from operating activities
Current ratio
Average Days Receivable
Budget variance
22. The sources of funds to finance the non-current assets of the organization. Also the debt and equity of the organization.
Capital
Debt to equity
HMO
Operating revenues
23. A method to evaluate the feasibility of an investment by determining how long it would take until the initial investment is recovered. This method does not account for the time value of money.
Fully allocated costs
Lien
Amortization of a loan
Payback
24. The process of adjusting for the time value of money backward in time to present value. See also Compounding.
Horizontal analysis
Payback
Discounting
Cost
25. A borrower's assets on which a lender has legal claim if a borrower defaults on a loan.
Performance budget
Collateral
Top-down budgeting
Interest
26. One of the four major financial statements of a health care organization. It presents a summary of the organization's assets - liabilities - and net assets as of a certain date.
Cash equivalents
Long-term debt to net assets ratio
Balance sheet
Traditional profit centers
27. That process of budgeting where the environmental assessment and planning of future activities are largely decided upon by a few individuals - and the budget is essentially dictated to the rest of the organization. Often called authoritarian approach
Top-down budgeting
Properties and equipment - net
Contribution margin
Time value of money
28. Budgets that typically cover two to five years.
Basic accounting equation
Total revenue
Revenues
Multiyear budget
29. [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
Total revenue
Service centers
Coupon payment
30. The system of accounting that recognizes revenues when earned and expenses when resources are used. This method is used by most non-governmental health care organizations. See also Cash basis of accounting.
Cost
Deferred revenues
Acid test ratio
Accrual basis of accounting
31. [Surplus/Operating Revenues]
Liquidity
Float
Profit margin
Market rate of interest
32. Service center costs are allocated to both mission centers and other service centers
Step Down
Lien
Long Term Solvency ratios
Capital financing
33. 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.
Cash flows from financing activities
Basis of Allocation
IRR
Cost avoidance
34. Demonstrates the ability to pay off long term debt
Revenue budget
Operating income
Statement of changes in net assets
Long Term Solvency ratios
35. Demonstrates the extent to which the organization is earning money from its assets. Not usually as imp for NPs - varies w/ NP.
Tangible assets
Precautionary purposes
Asset Management ratios
Operating income
36. An estimate/measure of how much a tangible asset (such as plant or equipment) has been "used up" during an accounting period. It is an expense that does not require any cash outflow under the accrual basis of accounting. See also Accumulated deprecia
Mission Center
Depreciation
Loan amortization schedule
Line of credit
37. The cumulative amount of depreciation recognized on an asset since its purchase. An asset's book value is equal to its purchase price less the amount of accumulated depreciation.
Current liabilities
Accumulated depreciation
Other expenses
Investment grade
38. 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.
Properties and equipment - net
Capital structure ratios
Comparative approach
Allowance for uncollectibles
39. The revenue that the organization has a right to collect. It is computed as: gross patient service revenues – contractual allowance and charity care.
Fixed Asset Turnover
Net patient service revenue
Accumulated depreciation
Program budget
40. Organizational units responsible for providing health care related services to clients - patients - or enrollees - and the related costs thereof.
Clinical cost centers
Discount rate
Cost object
Decentralization
41. A benefit paid for in advance (rent - insurance - etc.). Also called prepaid expense.
Dividends
Prepaid assets
Accumulated depreciation
Retained earnings
42. [(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
Long Term Solvency ratios
Long-term investments
Collateral
Expense volume variance
43. [Net Assets/Total Assets]. This ratio reflects the proportion of total assets financed by equity.
Net Assets to Total Assets
Cost object
Profit margin
Strategic planning
44. 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.
Cost object
Billing float
Step-down method
Restricted donation
45. An amount owed to the organization that will not be paid. Charity care is not considered a bad debt since nothing is owed to the organization for services provided.
Bad debt
Revenue rate variance
Collection float
Hedge
46. The cash flows derived from an organization's operating activities.
Payback
Operating cash flows
Inflation
Strategic planning
47. I) Measuring inputs against outputs. 2) The cost of service per unit rendered.
Efficiency
Mission Center
Revenue enhancement
Operating cash flows
48. Operating income plus other income. This is analogous to net income before taxes in for-profit entities.
Cash flows from operating activities
Expense cost variance
Excess of revenues over expenses
Temporarily restricted net assets
49. The amount expected to be collected from payors. It is calculated as: gross accounts receivable – discounts and allowances – allowance for un-collectibles.
Average payment period
Breakeven point
Net accounts receivable
Other support
50. Activities that provide guidance and feedback to keep the organization within its budget - such as staff meetings - regular reports - and bonuses.
Controlling activities
Cash flows from operating activities
Expense cost variance
Administrative profit centers
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