Test your basic knowledge |

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. 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).






2. Revenue is recorded when goods or services are delivered






3. 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






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






5. 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.






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






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






8. 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.






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






10. A legal obligation to pay the holder of the note or lien.






11. 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






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






13. Gross proceeds less the underwriter's fee and other issuance fees.






14. [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.






15. Budgets that typically cover two to five years.






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






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






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






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






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






21. 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.






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






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






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






25. 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.






26. A contract in which the lessee (user) agrees to pay the leassor (owner) a specific amount over a period of time for the use of an asset.






27. A section of the statement of cash flows used to report such activities as borrowing and paying back loans.






28. One of the four major financial statements. It summarizes the organization's revenues and expenses during an accounting period as well as other items that affect its unrestricted net assets. It is analogous to - but different from - an income stateme






29. The budget used to forecast operating expenses.






30. 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.






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






32. [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).






33. An organization whose profits can be distributed outside the organization and must pay taxes. Also called investor-owned organizations.






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






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






36. The cash flows derived from an organization's operating activities.






37. Responsibility centers responsible for making a certain return on investments.






38. [Total Liabilities/ Net assets]






39. Decisions regarding the acquisition of capital assets. The capital investment decision should be separate from the decision on how to finance capital assets.






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






41. [(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






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






43. A certificate attached to a bond representing the amount of interest to be paid to the holder.






44. 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.






45. 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.






46. An entity that sells bonds in order to raise money.






47. Revenues generated from an organization's operating activities.






48. [(actual cost per unit -budgeted cost per unit) x actual volume).- The difference between the variable expenses that would have been expected at the actual volume and those actually incurred.






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






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