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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. 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.






2. The revenue and expense budgets of an organization.






3. Financing that will be paid back in less than one year.






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






5. Opposite of the authoritarian approach. The roles and responsibilities of the budgeting process are diffused throughout the organization. Often called the participatory approach.






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






7. The amount the holder of the coupon receives periodically - usually semiannually. Over the year - it equals the coupon rate times the face value of the bond.






8. A technique to evaluate an organization's strengths - weaknesses - opportunities - and threats. Also called a WOTS-up analysis.






9. [Total Revenues/ Total Assets]






10. The cost of activities that take place to produce the final cost object






11. 1) The degree to which power and authority is concentrated in an organization. 2) The degree to which a variety of services are offered at a single location.






12. A form of long-term financing whereby the issuer receives cash and in return issues a note called a bond. By issuing the bond - the issuer agrees to make principal and/or interest payments on specific dates to the holders of the bond.






13. The activities of an organization directly related to its main line of business.






14. 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






15. That point at which total revenues equal total costs. It is described by the equation: (price x volume) = fixed costs + (variable cost per unit x volume).






16. 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






17. (non-operating revenues/total operating revenues)- A ratio that reflects how dependent the organization is on non-patient care related net income.






18. The elapsed time between financial statements. Common accounting periods






19. [(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






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






21. Revenue is recorded when goods or services are delivered






22. Agencies that assess the "credit worthiness" of an organization. The two major rating agencies are Moody's and Standard & Poor.






23. The cost of the supplies on hand at the beginning of the year.






24. 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.






25. Capital investment decisions designed to increase an organization's strategic position.






26. 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.






27. Expenses of the organization incurred in non-health-care related activities.






28. Operating income not reported elsewhere under revenues - gains - and other support.






29. [Inventory/ (Cost of Goods Sold/365)]






30. A statement intended to guide the organization into the future by identifying the unique attributes of the organization - why it exists - and what it hopes to achieve.






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






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






33. The purchase of assets with contributed and internally generated funds. See also Debt financing.






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






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






36. I) Calculating interest using the compound interest method. 2) Adjusting for the time value of money forward in time to a future value. See also Compound interest method and Discounting.






37. The amount of inventory on hand at the beginning of an accounting period. See also Ending inventory.






38. 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.






39. 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.






40. (tax exempt revenue bonds)- Bonds in which the interest payments to the investor are exempt from the IRS. These bonds must be issued by an organization that has received tax exemption from the IRS and be used to fund projects that qualify as "exempt






41. 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.






42. A measure of the resources used to generate revenue and/or provide a service. Often used synonymously with costs. See also Costs.






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






44. Looks at the percentage change in a line item's value from one year to the next using the formula: [(subsequent year -base year)/base year) x 100. See also Vertical analysis.






45. The budget used to forecast - and in some cases justify - the expenditures (and in some cases the sources of financing) for non-current assets.






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






47. 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.






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






49. [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).






50. A donation that has conditions which must be satisfied. See also Temporarily restricted net assets.