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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.
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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. (tax exempt revenue bonds)- Bonds in which the interest payments to the investor are exempt from the IRS. These bonds must be issued by an organization that has received tax exemption from the IRS and be used to fund projects that qualify as "exempt






2. 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.






3. 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.






4. (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.






5. A statistic used to allocate costs from a cost center based on a cause and effect relationship. For example - a common allocation base to allocate the costs of maintaining medical records is number of visits. See also Cost driver.






6. 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.






7. 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






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






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






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






11. The planning process that identifies the organization's mission and strategy in order to position itself for the future.






12. [(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






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






14. 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).






15. [Total assets/Net Assets]






16. [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.






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






18. Bonds that have received a rating ranging from AM to BBB (at S&P) - or Aaa to Bbb (Moody's) - of which the highest are called quality ratings.






19. I) Measuring inputs against outputs. 2) The cost of service per unit rendered.






20. The balance sheet category that includes actual money on hand as well as money equivalents - such as savings and checking accounts. It excludes cash restricted as to its use for something other than current operations.






21. Traces indirect costs to activity that uses them. Overhead collected in pools and distributed to cost object by cost drivers.






22. When different products use overhead related services in different proportions - and when the costs of those services are significantly different - The situation present when products consume overhead in different proportions.






23. Health maintenance organization. Entities that receive premium payments from enrollees with the understanding that the HMO will be financially responsible for all predefined health care required by its enrollees for a specified period of time. The he






24. A measure of the income earned from operating activities. It is calculated as: unrestricted revenues - gains - and other support -expenses and losses.






25. Price times total quantity.






26. (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;






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






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






29. The ease and speed with which an asset can be turned into cash.






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






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






32. [(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.






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






34. An entity that is owed money for lending funds or supplying goods or services on credit.






35. Assets that have restrictions on their use which will be removed either with the passage of time or the occurrence of some event.






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






37. Assets that have a useful life greater than one year - such as plant - property - and equipment. Plant and equipment are depreciated over time; land (property) is not.






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






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






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






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






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






43. Generally - assets that will be used or consumed within one year. Some organizations use a period of less than one year.






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






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






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






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






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






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






50. Budgets that typically cover two to five years.







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