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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. [(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






2. Market value. The price at which something - such as bonds and stocks - could be bought or sold today on the open market.






3. 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.






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






5. Financing that will be paid back in less than one year.






6. Looks at the percentage change in a line item's value from one year to the next using the formula: [(subsequent year -base year)/base year) x 100. See also Vertical analysis.






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






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






9. A catchall category for miscellaneous expenses and losses not included in other categories (telephone - travel - meals - etc.).






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






11. 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.






12. The cost of activities that take place to produce the final cost object






13. 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.






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






15. Demonstrates the extent to which the organization is earning money from its assets. Not usually as imp for NPs - varies w/ NP.






16. The amount the holder of the coupon receives periodically - usually semiannually. Over the year - it equals the coupon rate times the face value of the bond.






17. 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.






18. Literally non-movable assets. Generally used to refer to buildings and equipment.






19. Budgets that typically cover two to five years.






20. (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;






21. 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.






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






23. The cash flows derived from an organization's operating activities.






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






25. [Total Revenues/ Total Assets]






26. [(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.






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






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






29. Full-time equivalent employees. Two half-time employees equal one FTE.






30. Decisions regarding the acquisition of capital assets. The capital investment decision should be separate from the decision on how to finance capital assets.






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






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






33. 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






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






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






36. Organizational units primarily responsible for providing services and earning a profit based on the health care services provided.






37. A transaction that reduces the risk of an investment.






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






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






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






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






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






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






44. 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






45. 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.






46. Organizational units responsible for providing administrative support at a profit to other organizational units or to the organization as a whole and/or raising funds externally.






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






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






49. 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.






50. The revenue and expense budgets of an organization.







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