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Test your basic knowledge |
ACCA Financial Management
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Study First
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
.
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. An entity that owns other companies.
Decentralization
IRR
Return on total assets
Parent organization
2. The difference between the initial amount paid for an investment and the related future cash inflows after they have been adjusted (discounted) by the cost of capital.
Capital structure ratios
Net present value
Line of credit
Permanently restricted net assets
3. 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.
Line-item budget
Common costs
Capital appreciation
Direct costs
4. Ratios that measure how the organization's assets are financed and/or whether the organization can take on new debt.
Capital structure ratios
Spillover cash flows
Cost Accounting
Coupon
5. Demonstrates the extent to which the organization is earning money from its assets. Not usually as imp for NPs - varies w/ NP.
Incremental cash flows
Asset Management ratios
Asset Turnover Ratio
Market rate of interest
6. [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.
Current ratio
Operating expenses
Capital structure decision
Net present value
7. Amounts due to the organization from patients - third parties - and others.
Collateral
Quick ratio
Non-operating revenues
Accounts receivable
8. 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.
Budget variance
Acid test ratio
FV
Allocation base
9. The rise in an economy's general level of prices.
Profitability ratios
Net present value
SWOT analysis
Inflation
10. Donated assets that have restrictions on their use which will never be removed.
Allocation
Time value of money
Permanently restricted net assets
Statement of operations
11. Any product - service - customer - contract - project - process or other work unit for which a separate cost measurement is desired.
Cost object
Long-term debt - net of current portion
Responsibility center
Statement of cash flows
12. 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.
Discounted cash flows
Collections policies and procedures
Incremental cash flows
Accumulated depreciation
13. [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).
Short-term financing
Expense cost variance
Net assets to total assets
Net accounts receivable
14. The budget used to forecast operating expenses.
Current ratio
Operating income
Basis of Allocation
Expense budget
15. Expenses of the organization incurred in non-health-care related activities.
Allocation base
Times interest earned
Non-operating expenses
Capital assets
16. Capital investment decisions designed to increase the operational capability of a health care organization.
Expansion decisions
Billing - collections - and disbursement policies and procedures
Profit margin
Mortgage
17. Full-time equivalent employees. Two half-time employees equal one FTE.
FTE
Final cost object
Traditional profit centers
Capital appreciation
18. Decisions regarding the relative amount of debt and equity used to finance the organization's non-current assets.
Long-term debt - net of current portion
Top-down/bottom-up approach
Capital structure decision
Basis of Allocation
19. The section of the statement of cash flows that reports the total change in cash and cash equivalents over the accounting period.
Certainty
FTE
Net assets released from restriction
Net increase (decrease) in cash and cash equivalents
20. Organizational units responsible for their own costs that provide administrative support to other organizational units or the organization
SWOT analysis
Cash basis of accounting
Revenues
Administrative cost centers
21. 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.
Fixed supplies budget
Profit margin
Intermediate Cost Object
Budget
22. Costs not traced to a cost object - but that must eventually be allocated across cost objects. See also Direct costs.
Average Days Inventory
Fixed labor budget
Indirect costs
Total revenue
23. Portion of profit an organization distributes to investors. By law - only investor-owned health care organizations can distribute dividends outside the organization.
Average Days Receivable
Compounding
Dividends
Tax-exempt bonds
24. [(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
Assets
Notes payable
Debt service coverage
Days cash on hand
25. 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.
Opening inventory
Line of credit
Tangible assets
Expense volume variance
26. Amounts earned by the organization from the provision of service or sale of goods.
Fixed assets
Revenues
Direct costs
Mail float
27. When products are manufactured in batches in different sizes - and overhead activities are affected by the size of the batch being produced
Volume diversity
Assets
Collection float
Budget variance
28. [(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.
Expense cost variance
Mortgage
Lien
Tax-exempt bonds
29. The gradual process of paying off debt through a long series of equal periodic payments. Each payment covers a portion of the principal plus current interest. The periodic payments are equal over the lifetime of the loan - but the proportion going to
Discounting
Fixed asset turnover
Revenue rate variance
Amortization of a loan
30. Expenses that have been incurred - but not yet paid.
Performance budget
Cash flows from financing activities
Expansion decisions
Accrued expenses
31. I) Organizations that have a special designation because they provide goods or services that result in needed community benefit. In turn - such organizations are not required to pay most taxes. 2) The designation of an organization as one that is not
Operating margin
Not-for-profit
Lease
Net patient service revenue
32. Gross proceeds less the underwriter's fee and other issuance fees.
Net Assets
Bad debt
Revenues
Net proceeds from a bond issuance
33. Cash flows that have been adjusted to their present value to account for the cost of capital (over time) and the time value of money.
Discounted cash flows
Revenue budget
Expansion decisions
Hedge
34. [Total assets/Net Assets]
Lien
Operating expenses
Effectiveness
Leverage
35. Literally non-movable assets. Generally used to refer to buildings and equipment.
Assets
Fixed assets
Non-current assets
Current ratio
36. Stated interest rate on a bond - as promised by the issuer.
Coupon rate
Annuity
Effectiveness
Decentralization
37. Amounts given to the organization for operating purposes - such as governmental appropriations and unrestricted donations.
Other support
Liabilities
Bad debt
Income from investments
38. Financial obligations that will be paid off over a time period longer than one year
Revenues
Operating cash flows
Non-current liabilities
Profitability ratios
39. Price times total quantity.
Average payment period
Debt to equity
Total revenue
Acid test ratio
40. An assignment or grading of the likelihood that an organization will not default on a bond.
Asset Turnover Ratio
Cost
Accountability
Bond rating
41. A technique to evaluate an organization's strengths - weaknesses - opportunities - and threats. Also called a WOTS-up analysis.
Liabilities
SWOT analysis
Lease
Assets
42. The process of distributing service center costs to mission centers - to determine the full cost of each mission center
Spillover cash flows
Clinical cost centers
Allocation
Periodic payments
43. One of the four major financial statements. It explains the changes in net assets from one period to the next on the balance sheet. Also called statement of changes in owners' equity in a for-profit business.
Certainty
Accounting period
Accountability
Statement of changes in net assets
44. A budget in which line items are presented by program.
Decentralization
Program budget
Payback
Disbursement float
45. The expenses incurred from an organization's operating activities.
Operating expenses
Cash flows from financing activities
Revenue budget
Balance sheet
46. Debt to be paid off in a period longer than one year.
Bad debt
Long-term financing
HMO
Expenses
47. The rate of return required to undertake a project. Also called the hurdle rate or discount rate.
Cost of capital
MV
Financing mix
Collections policies and procedures
48. 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.
Common costs
Activity ratios
Current ratio
Bad debt
49. Agencies that assess the "credit worthiness" of an organization. The two major rating agencies are Moody's and Standard & Poor.
Capital financing
Bond rating agency
Properties and equipment - net
Working capital
50. Costs that are traced to a cost object. See also Indirect costs and Cost object.
Direct costs
Contribution margin
Deferred revenues
Controlling activities