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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.
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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. Organizational units primarily responsible for providing services and earning a profit based on the health care services provided.






2. 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






3. Ratios that answer the question: How well is the organization positioned to meet its short-term obligations?






4. Financial and non-financial standards against which organizational performance is measured.






5. [Net Assets/Total Assets]. This ratio reflects the proportion of total assets financed by equity.






6. 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






7. 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






8. Supplementing traditional sources of revenue with new sources.






9. Current year budget projected for the coming fiscal year assumes no program changes and adjust for price - workload - annualizations






10. 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






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






12. 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.






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






14. 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.






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






16. 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?






17. 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.






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






19. Activities that provide guidance and feedback to keep the organization within its budget - such as staff meetings - regular reports - and bonuses.






20. [operating income/total operating revenues]- The proportion of profit remaining after subtracting total operating expenses from operating revenues.






21. A schedule detailing the principal and interest payments required to repay a loan. Typically - the periodic payments remain unchanged - but the proportion used to payoff the principal increases over time.






22. The amount of supplies used to provide a service or good.






23. An approach to analyzing the financial condition of an organization based on ratios calculated from line items found in the financial statements. There are four major categories of ratios: liquidity - profitability - capitalization - and activity.






24. (excess of revenues over expenses/total assets)- A measure of how much profit is earned for each dollar invested in assets. In for-profit organizations it is called return on assets and is calculated as: net income/assets.






25. [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






26. An entity that sells bonds in order to raise money.






27. [net assets/total assets)- This ratio reflects the proportion of total assets financed by equity. In for-profit organizations it is called the equity to total asset ratio and is calculated using the formula [owners' equity/total assets).






28. Demonstrates the extent to which the organization is earning money from its assets. Not usually as imp for NPs - varies w/ NP.






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






30. The difference between what was planned (budgeted) and what was achieved (actual).






31. (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;






32. {current liabilities/[(total expenses






33. Portion of profit an organization distributes to investors. By law - only investor-owned health care organizations can distribute dividends outside the organization.






34. Properties and equipment less accumulated depreciation.






35. process of measuring the resources (costs) used to produce results.






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






37. The revenue and expense budgets of an organization.






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






39. 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.






40. 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.






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






42. A measure of the income earned from operating activities. It is calculated as: unrestricted revenues - gains - and other support -expenses and losses.






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






44. Financial obligations that will be paid off over a time period longer than one year






45. 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






46. [total revenues/net plant & equipment]- This ratio measures the number of dollars generated for each dollar invested in an organization's plant and equipment.






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






48. 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.






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






50. The cash flows derived from an organization's operating activities.







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