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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. 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.






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






3. An amount owed to the organization that will not be paid. Charity care is not considered a bad debt since nothing is owed to the organization for services provided.






4. The revenue and expense budgets of an organization.






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






6. Organizational units responsible for their own costs that provide administrative support to other organizational units or the organization






7. A measure of the resources used to generate revenue and/or provide a service. Often used synonymously with costs. See also Costs.






8. A security interest in one or more assets granted to lenders in a secured loan.






9. Expenses that have been incurred - but not yet paid.






10. [Total assets/Net Assets]






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






12. [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.






13. 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.






14. 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.






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






16. Capital investment decisions designed to increase an organization's strategic position.






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






18. [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






19. An estimate/measure of how much a tangible asset (such as plant or equipment) has been "used up" during an accounting period. It is an expense that does not require any cash outflow under the accrual basis of accounting. See also Accumulated deprecia






20. [Total Revenues/ Total Assets]






21. Directly related to the purposes of the organization and the delivery of services






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






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






24. Price times total quantity.






25. [(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






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






27. 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.






28. What a series of equal payments in the future is worth today taking into account the time value of money.






29. Non-operating income.






30. Budgets that typically cover two to five years.






31. Assets that have a physical presence.






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






33. The amount of time between when an organization receives a service and pays for it.






34. 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






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






36. Revenue is recorded when goods or services are delivered






37. 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.






38. 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).






39. A borrower's assets on which a lender has legal claim if a borrower defaults on a loan.






40. The section of the statement of cash flows that reports the total change in cash and cash equivalents over the accounting period.






41. Monies received that have not yet been earned. One of the most common deferred revenues is the receipt of capitation on the basis of per member per month (PMPM).






42. 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.






43. 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.






44. (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






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






46. The time between the issuance of the bill and the time funds are available for use by the health care organization. It has two components: mail float and processing float.






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






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






49. 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.






50. Ratios that answer the question: How well is the organization positioned to meet its short-term obligations?