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Test your basic knowledge |
ACCA Financial Management
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Subjects
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certifications
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business-skills
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acca
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
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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. The system of accounting that recognizes revenues when cash is received and expenses when cash is paid out. See also Accrual basis of accounting.
Mortgage bonds
Restricted donation
Cash basis of accounting
Long Term Solvency ratios
2. Organizational units responsible for their own costs that provide administrative support to other organizational units or the organization
Profit margin
Final cost object
Other support
Administrative cost centers
3. 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.
Fixed Asset Turnover
Depreciation
Incremental cash flows
Discount rate
4. 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
Capital budget
Fixed (interest) rate debt
Contribution margin
Step-down method
5. Expenses that have been incurred - but not yet paid.
Accrued expenses
Net Assets
Depreciation
For-profit
6. The central document of the planning/control cycle. It identifies revenues and resources that will be needed by an organization to achieve its goals and objectives.
Budget
Cash basis of accounting
Allocation base
Billing float
7. [long-term debt/net assets]- A measure of the proportion of an organization's assets that are financed by debt as opposed to equity. In for-profit organizations - it is called the long-term debt to equity ratio and is calculated using the formula [lo
Budget variance
Average Days Inventory
Inflation
Long-term debt to net assets ratio
8. The amount of time between when an organization receives a service and pays for it.
Tax-exempt bonds
Market rate of interest
Disbursement float
Capital structure decision
9. Revenues of the organization earned in non-healthcare related activities.
Asset Turnover Ratio
Acid test ratio
Indirect costs
Non-operating revenues
10. The revenue and expense budgets of an organization.
Beginning inventory
Operating budget
Product diversity
Current ratio
11. Gross proceeds less the underwriter's fee and other issuance fees.
Indirect costs
Net proceeds from a bond issuance
Properties and equipment
Horizontal analysis
12. Being subject to sanctions with respect to carrying out responsibilities.
Leverage
Accumulated depreciation
Indirect costs
Accountability
13. [(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
Return on total assets
Debt service coverage
Mail float
Matching principle
14. 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.
Capital budget
Annuity
Revenue rate variance
Activity Based Costing
15. {current liabilities/[(total expenses
Ratio analysis
Average payment period
Net assets released from restriction
Issuer
16. [(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.
Collections policies and procedures
Times interest earned
Net Assets
Expense cost variance
17. The current traded rate for similar risk securities.
Market rate of interest
Float
Cost
Cost object
18. A catchall category for miscellaneous expenses and losses not included in other categories (telephone - travel - meals - etc.).
Bad debt
Basis of Allocation
Direct costs
Other expenses
19. Portion of the profits the organization keeps in-house to use in support of its mission.
Retained earnings
Collateral
Strategic financial planning
Net present value
20. Assets = Liabilities + Net Assets (aka Equity).
Total revenue
Operating revenues
FV
Basic accounting equation
21. 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.
Cost centers
Mission statement
Return on net assets
Fixed assets
22. [total revenues/net plant & equipment]- This ratio measures the number of dollars generated for each dollar invested in an organization's plant and equipment.
Fixed asset turnover
Coupon payment
Average payment period
Strategic planning
23. Generally - assets that will be used or consumed within one year. Some organizations use a period of less than one year.
Administrative profit centers
Incremental cash flows
Net working capital
Current assets
24. [Total Revenues/ Total Assets]
Non-current liabilities
Asset Turnover Ratio
Volume diversity
Net accounts receivable
25. Financing that will be paid back in less than one year.
Average payment period
Periodic payments
Increase in unrestricted net assets
Short-term financing
26. An entity that temporarily grants the use of money or an asset to another in return for compensation - usually in the form of interest.
Lender
Accountability
Cost of goods sold
Operating income
27. Funds provided by a private entity or individual without the requirement of repayment. Donations can either be restricted or unrestricted.
Donation
Single/Simple Step
FTE
Non-regular cash flows
28. 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.
Cash and cash equivalents
Accounts payable
Comparative approach
Discounting
29. 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.
Investor
Line of credit
Non-operating income
Long-term financing
30. 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.
Annuity
Clinical cost centers
Centralization
Perpetuity
31. 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.
Balance sheet
Fixed (interest) rate debt
Net increase (decrease) in cash and cash equivalents
Ending inventory
32. The total amount of multiyear debt due in future years.
Net Assets
Intermediate Cost Object
Cost
Long-term debt - net of current portion
33. The resources owned by the organization. It is one of the three major categories on the balance sheet.
Market rate of interest
Basis of Allocation
Collateral
Assets
34. The idea that a dollar today is worth more than a dollar in the future.
Statement of changes in net assets
Non-operating ratio
Time value of money
Step-down method
35. 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.
Fixed assets
Lender
Current assets
Lease
36. The method by which to distribute service center costs to mission centers; in general the one that most accurately measures use by the cost centers that receives its services (food service - # of meals - hospital laundry - # of pounds processed)
Discount rate
Expenses
Basis of Allocation
Capital assets
37. Series of payments over time - such as interest paid to bondholders.
Periodic payments
Expense volume variance
Expansion decisions
Bonds
38. I) Measuring inputs against outputs. 2) The cost of service per unit rendered.
Average Days Receivable
Efficiency
Effectiveness
Loan amortization schedule
39. process of measuring the resources (costs) used to produce results.
Cash flows from financing activities
Cost Accounting
Bond rating
Assets
40. One of the four major financial statements. It answers the question: Where did our cash come from and where did it go during the accounting period?
Other revenues
Statement of cash flows
Leverage
Net proceeds from a bond issuance
41. Donated assets that have restrictions on their use which will never be removed.
Mission Center
Permanently restricted net assets
Capital appreciation
Effectiveness
42. [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.
Parent organization
Controlling activities
Current ratio
Ratio analysis
43. The percentage of each asset relative to total assets.
Activity Based Costing
Cost object
Asset mix
Product diversity
44. Organizational units responsible for providing services and controlling their costs. There are two major types: clinical cost centers and administrative cost centers.
Net accounts receivable
Performance budget
Expense cost variance
Cost centers
45. The unit of service which we wish to know the cost for (hospital admission - classroom hour - course - etc.)
Final cost object
Operating revenues
For-profit
Excess of revenues over expenses
46. The increase in the value of an investment from the time it is purchased until the time it is sold.
Coupon rate
Accounting period
Operating income
Capital appreciation
47. Costs that stay the same in total over the relevant range as volume increases - but that change inversely on a per unit basis.
Fixed costs
Permanently restricted net assets
Operating cash flows
Balance sheet
48. 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.
FV
Accountability
Total revenue
Efficiency
49. A technique to evaluate an organization's strengths - weaknesses - opportunities - and threats. Also called a WOTS-up analysis.
SWOT analysis
Controlling activities
Operating activities
Properties and equipment
50. Properties and equipment less accumulated depreciation.
Discount rate
Properties and equipment - net
Revenue budget
Lien