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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. 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.






2. Return on investment. The percentage gain or loss experienced from an investment.






3. Private entity or individual who makes a donation






4. [Net Accounts Receivable/(Revenue/356)]






5. The expenses incurred from an organization's operating activities.






6. Capital investment decisions designed to increase the operational capability of a health care organization.






7. The idea that a dollar today is worth more than a dollar in the future.






8. The elapsed time between when the patient or third-party payor sends the payment and the time the health care provider receives the payment.






9. 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.






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






11. A budget which presents not only line items and programs but also the performance goals that each program can be expected to attain. See also Line item budget and Program budget.






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






13. Organizational units responsible for providing administrative support at a profit to other organizational units or to the organization as a whole and/or raising funds externally.






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






15. 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.






16. One of the four major financial statements. It explains the changes in net assets from one period to the next on the balance sheet. Also called statement of changes in owners' equity in a for-profit business.






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






18. [Total Revenues/ Total Assets]






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






20. Donated assets that have restrictions on their use which will never be removed.






21. 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)






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






23. 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.






24. [Surplus/Operating Revenues]






25. Assets that have a useful life greater than one year - such as plant - property - and equipment. Plant and equipment are depreciated over time; land (property) is not.






26. General and administrative expenses. Operating expenses that are not contained in the labor or supplies budgets.






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






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






29. {[cash + marketable securities)/[(operating expenses -depreciation)/ 365].- A ratio that indicates the number of days' worth of expenses an organization can cover with its most liquid assets (cash and marketable securities).






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






31. A contract between a lender and a potential borrower preauthorizing the potential borrower's right to borrow up to a specific amount on request as long as they fulfill the terms and conditions of the contract. Also called a letter of credit.






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






33. Full-time equivalent employees. Two half-time employees equal one FTE.






34. A catchall category for miscellaneous expenses and losses not included in other categories (telephone - travel - meals - etc.).






35. [(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






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






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






38. 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.






39. 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.






40. 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






41. Being subject to sanctions with respect to carrying out responsibilities.






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






43. Cash inflows and outflows for the organization resulting from investing activities such as purchasing and selling investments or investing in itself by purchasing or selling non-current assets. It also includes transfers to and from the parent corpor






44. Assets that have a physical presence.






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






46. The section of the expense budget that forecasts salary and benefits.






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






48. 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.






49. Requiring the patient to pay part of his/her health care bill. These payments are used to prevent over-utilization of services.






50. Monies received that have not yet been earned. One of the most common deferred revenues is the receipt of capitation on the basis of per member per month (PMPM).







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