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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. 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.






2. The percentage of each asset relative to total assets.






3. 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.






4. A series of equal cash flows made or received at regular time intervals. Ordinary annuities occur at the end of each period whereas annuities due occur at the beginning of each period.






5. Ratios that measure how efficiently an organization is using its assets to produce revenues.






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






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






8. 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.






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






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






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






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






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






15. 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.






16. 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.






17. An investment that generates an annuity for an indefinite period of time - basically forever.






18. 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.






19. [Total Liabilities/ Net assets]






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






21. (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;






22. Private entity or individual who makes a donation






23. Cash flows that have been adjusted to their present value to account for the cost of capital (over time) and the time value of money.






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






25. A security whose interest rate does not change during the lifetime of the bond.






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






27. 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






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






29. 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.






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






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. 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.






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






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






35. [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).






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






37. Previously restricted assets no longer restricted because the terms of the restriction have been met.






38. {[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).






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






40. 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.






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






42. A good or service provided in return for some type of compensation.






43. The total amount of multiyear debt due in future years.






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






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






46. [(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






47. Costs not traced to a cost object - but that must eventually be allocated across cost objects. See also Direct costs.






48. The increase in the value of an investment from the time it is purchased until the time it is sold.






49. [Total Revenues/ Total Assets]






50. 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.