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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. [Total Revenues/(Net Fixed Assets)]. This ratio measures the number of dollars generated for each dollar invested in an organization's fixed assets (i.e. plant and equipment).






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






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






4. 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






5. The budget that forecasts the operating and - in some cases - the non- operating revenues that will be earned during the budget period.






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






7. The rise in an economy's general level of prices.






8. [Total Liabilities/ Net assets]






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






10. 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.






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






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






13. The cost of the supplies on hand at the beginning of the year.






14. {[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).






15. Series of payments over time - such as interest paid to bondholders.






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






17. [total revenues/net plant & equipment]- This ratio measures the number of dollars generated for each dollar invested in an organization's plant and equipment.






18. Financial and non-financial standards against which organizational performance is measured.






19. Portion of the profits the organization keeps in-house to use in support of its mission.






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






21. The system of accounting that recognizes revenues when earned and expenses when resources are used. This method is used by most non-governmental health care organizations. See also Cash basis of accounting.






22. The idea that a dollar today is worth more than a dollar in the future.






23. A method by which the organization develops its strategies and budgets to meet future financial targets.






24. 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.






25. How an organization chooses to finance its working capital needs.






26. (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.






27. The ability of an organization to find new ways to operate that obviate the need for certain classes of costs - such as doing procedures on an outpatient rather than inpatient basis.






28. Donated assets that have restrictions on their use which will never be removed.






29. Costs that are traced to a cost object. See also Indirect costs and Cost object.






30. 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.






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






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






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






34. The current traded rate for similar risk securities.






35. A legal obligation to pay the holder of the note or lien.






36. 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.






37. The section of the expense budget that forecasts salary and benefits.






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






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






40. 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.






41. An entity that sells bonds in order to raise money.






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






43. 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.






44. 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.






45. 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.






46. The delay between providing the service and getting the bill to the patient or third party. There are two aspects of billing float: assembling the bill and delivering the bill to the patient or third-party payor.






47. The purchase of assets with contributed and internally generated funds. See also Debt financing.






48. 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.






49. Amounts given to the organization for operating purposes - such as governmental appropriations and unrestricted donations.






50. [(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