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ACCA Financial Management

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






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






3. [(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






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






5. The budget used to forecast operating expenses.






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






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






8. [(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.






9. Organizational units responsible for providing administrative support at a profit to other organizational units or to the organization as a whole and/or raising funds externally.






10. An entity that gives capital to another entity in expectation of a financial or non-financial return.






11. A transaction that reduces the risk of an investment.






12. [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).






13. Organizational units responsible for providing services and controlling their costs. There are two major types: clinical cost centers and administrative cost centers.






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






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






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






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






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






19. 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.






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






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






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






23. A situation in which if one project is implemented the other(s) will not be.






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






25. 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.






26. 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.






27. [Total assets/Net Assets]






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






29. {[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).






30. 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






31. [(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






32. Cash inflows and outflows resulting from financing activities - such as obtaining grants or endowments - or from borrowing or paying back long-term debt.






33. Budgets that typically cover two to five years.






34. [(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






35. 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






36. 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.






37. Future value. What an amount invested today (or a series of payments made over time) will be worth at a given time in the future using the compound interest method. This accounts for the time value of money. See also Present value.






38. (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.






39. 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.






40. Organizational unit given the responsibility to carry out one or more tasks and/or achieve one or more outcomes.






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






42. Financial obligations that will be paid off over a time period longer than one year






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






44. The degree to which standards are met.






45. [operating income/total operating revenues]- The proportion of profit remaining after subtracting total operating expenses from operating revenues.






46. The bottom line in the statement of operations. It includes such items as operating and non-operating income - contributions of long-lived assets - transfers to parent - and extraordinary items.






47. The bottom area of the financial statements that contains key information not available in the body of the statements - such as how charity is determined - the composition of investments - which assets are restricted - and the depreciation method.






48. When products are manufactured in batches in different sizes - and overhead activities are affected by the size of the batch being produced






49. Assets that have a physical presence.






50. Revenues of the organization earned in non-healthcare related activities.