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ACCA Financial Management

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  • 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 organization's financial obligations that are to be paid within one year.






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






3. The degree of dispersion of responsibility within an organization. See also Centralization.






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






5. An entity that is owed money for lending funds or supplying goods or services on credit.






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






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






8. Expenses that have been incurred - but not yet paid.






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






10. [Total Revenues/ Total Assets]






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






12. 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.






13. 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.






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






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






16. [(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






17. Revenue is recorded when goods or services are delivered






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






19. [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).






20. Financing used expressly for the purchase of non-current assets.






21. 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






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






23. A borrower's assets on which a lender has legal claim if a borrower defaults on a loan.






24. The amount remaining after subtracting variable costs from revenues. When the organization is not at capacity - it is the "profit" the organization makes on providing each new unit that is available to cover all other costs. Contribution margin may b






25. 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.






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






27. Cash flows that occur solely as a result of undertaking a project. Basically the marginal difference between alternatives.






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






29. Organizational units primarily responsible for ensuring that services are provided to a population in a manner that meets the volume and quality requirements of the organization. Service centers are the most basic type of responsibility centers.






30. [(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






31. The gradual process of paying off debt through a long series of equal periodic payments. Each payment covers a portion of the principal plus current interest. The periodic payments are equal over the lifetime of the loan - but the proportion going to






32. IA category of non-current assets not intended to be used for operations - but only for capital appreciation and dividends - and that will be held for a period longer than one year.






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






35. Amounts the organization is obligated to pay others - including suppliers and creditors.






36. The revenue and expense budgets of an organization.






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






38. Policies and procedures that address when and how to collect revenues - such as paying at time of service - sending accounts to collection agencies - and writing off accounts as bad debt.






39. Costs (such as rent - administration - insurance - etc. that are shared by a number of services or departments and cannot easily be broken down to the services attributable to each (surgery - emergency medicine - etc.). Also called joint costs.






40. Irregular cash flows - typically occurring at the end of the life of a project.






41. The sources of funds to finance the non-current assets of the organization. Also the debt and equity of the organization.






42. 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






43. Non-operating income.






44. [(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






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






46. Tools used to increase the amount of cash available to the organization. The objective of billing - credit - and collection policies is to accelerate cash receipts; the objective of cash disbursement policies is to slow down cash outflows.






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/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.






49. The rate of return required to undertake a project. Also called the hurdle rate or discount rate.






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







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