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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. Non-operating income.






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






3. 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).






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






5. Time delays in the billing and collection process. There are four categories of float: billing - collection - transit - and disbursement. An organization's goal is to optimize float for incoming revenues and outgoing bills.






6. 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.






7. 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






8. I) The cost to borrow money. It can be expressed in dollars or as a percentage. 2) Payment to creditors for the use of money on credit.






9. 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.






10. The difference between current assets and current liabilities.






11. 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






12. The costs of a service after taking into account its direct and fair share of allocated costs.






13. 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






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






15. [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.






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






17. Costs that stay the same in total over the relevant range as volume increases - but that change inversely on a per unit basis.






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






19. The amount of the total revenue variance that occurs because the actual average rate charged varies from that originally budgeted. It can be calculated using the formula: (actual rate -budgeted rate) x actual volume.






20. 1) The returns that must be generated on a project to compensate the organization for its risk. 2) The returns the organization is foregoing by investing its money in one project as opposed to an alternative of similar risk. See also Cost of capital.






21. The section of the expense budget that forecasts the cost of those supplies that will not vary as a direct result of changes in the amount of services provided (such as administrative office supplies).






22. The revenue and expense budgets of an organization.






23. Series of payments over time - such as interest paid to bondholders.






24. {[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).






25. Proceeds lost by foregoing other opportunities.






26. 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.






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






28. What a series of equal payments in the future is worth today taking into account the time value of money.






29. The method of capital budgeting that compares the cash flows resulting from continuing with the existing alternative to those that would result if the equipment were replaced.






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






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






32. 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.






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






34. {current liabilities/[(total expenses






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






36. Debt to be paid off in a period longer than one year.






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






38. 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.






39. The absence of risk in an investment.






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






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






42. Directly related to the purposes of the organization and the delivery of services






43. The amount expected to be collected from payors. It is calculated as: gross accounts receivable – discounts and allowances – allowance for un-collectibles.






44. Organizational units responsible for their own costs that provide administrative support to other organizational units or the organization






45. Any product - service - customer - contract - project - process or other work unit for which a separate cost measurement is desired.






46. 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






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






48. [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).






49. [(cash + marketable securities)/current liabilities). A liquidity ratio that measures how much cash and marketable securities are available to payoff all current liabilities.






50. [(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