Test your basic knowledge |

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. [(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






2. A method to evaluate the feasibility of an investment by determining how long it would take until the initial investment is recovered. This method does not account for the time value of money.






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






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






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






6. The amount of the total revenue variance that occurs because the actual average rate charged varies from that originally budgeted. It can be calculated using the formula: (actual rate -budgeted rate) x actual volume.






7. 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.






8. Portion of profit an organization distributes to investors. By law - only investor-owned health care organizations can distribute dividends outside the organization.






9. {[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).






10. [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.






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






12. An entity that owns other companies.






13. An organization's financial obligations that are to be paid within one year.






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






15. 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.






16. Ratios that measure how the organization's assets are financed and/or whether the organization can take on new debt.






17. Proceeds lost by foregoing other opportunities.






18. [(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






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






20. An assignment or grading of the likelihood that an organization will not default on a bond.






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






22. [Surplus/Operating Revenues]






23. 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.






24. The amount remaining after subtracting variable costs from revenues. When the organization is not at capacity - it is the "profit" the organization makes on providing each new unit that is available to cover all other costs. Contribution margin may b






25. [Net Assets/Total Assets]. This ratio reflects the proportion of total assets financed by equity.






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






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






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






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






30. The method of capital budgeting that compares the cash flows resulting from continuing with the existing alternative to those that would result if the equipment were replaced.






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






32. One of the four major financial statements. It summarizes the organization's revenues and expenses during an accounting period as well as other items that affect its unrestricted net assets. It is analogous to - but different from - an income stateme






33. Costs that stay the same in total over the relevant range as volume increases - but that change inversely on a per unit basis.






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






35. 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.






36. 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).






37. Non-operating income.






38. That process of budgeting where the environmental assessment and planning of future activities are largely decided upon by a few individuals - and the budget is essentially dictated to the rest of the organization. Often called authoritarian approach






39. Revenue is recorded when goods or services are delivered






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






41. 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






42. [Total assets/Net Assets]






43. 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.






44. IA category of non-current assets not intended to be used for operations - but only for capital appreciation and dividends - and that will be held for a period longer than one year.






45. Amounts the organization is obligated to pay others - including suppliers and creditors.






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






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






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






49. Operating income plus other income. This is analogous to net income before taxes in for-profit entities.






50. The amount of inventory on hand at the beginning of an accounting period. See also Ending inventory.