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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. The budget that projects the organization's cash inflows and outflows. The bottom line in the cash budget is the amount of cash available at the end of the period.






2. Service center costs are allocated to both mission centers and other service centers






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






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






5. A benefit paid for in advance (rent - insurance - etc.). Also called prepaid expense.






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






7. 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.






8. [(excess of revenues over expenses + interest expense)/interest expense].- This ratio enables creditors and lenders to evaluate an organization's ability to generate earnings necessary to meet interest expense requirements. In for-profit organization






9. The budget format that lists revenues and expenses by category - such as labor - travel - and supplies. Categories are sometimes broken down into sub-categories. See also Performance budget and Program budget.






10. The category of assets summarizing the amount of the major capital investments of the facility in plant - property - and equipment (PP&E). Plant means buildings - property is land - and equipment includes a wide variety of durable items from beds to






11. Responsibility centers responsible for making a certain return on investments.






12. 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






13. 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.






14. 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.






15. One of the four major financial statements. It answers the question: Where did our cash come from and where did it go during the accounting period?






16. 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.






17. Assets that have a physical presence.






18. A category of income that includes unrestricted interest - dividends - and gains from the sale of unrestricted investments.






19. Revenue is recorded when goods or services are delivered






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






21. Assets minus Liabilities. One of the three major categories on the balance sheet. Traditionally known as stockholders' equity in investor-owned organizations and fund balance in not-for-profit organizations. In not-for-profit health care organization






22. 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






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






24. [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






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






26. The amount expected to be collected from payors. It is calculated as: gross accounts receivable – discounts and allowances – allowance for un-collectibles.






27. Capital investment decisions designed to increase the operational capability of a health care organization.






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






29. Tools used to increase the amount of cash available to the organization. The objective of billing - credit - and collection policies is to accelerate cash receipts; the objective of cash disbursement policies is to slow down cash outflows.






30. A budget which presents not only line items and programs but also the performance goals that each program can be expected to attain. See also Line item budget and Program budget.






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






32. An entity that gives capital to another entity in expectation of a financial or non-financial return.






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






34. The section of the expense budget that forecasts the cost of those supplies that will not vary as a direct result of changes in the amount of services provided (such as administrative office supplies).






35. Traces indirect costs to activity that uses them. Overhead collected in pools and distributed to cost object by cost drivers.






36. [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).






37. [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.






38. 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.






39. (non-operating revenues/total operating revenues)- A ratio that reflects how dependent the organization is on non-patient care related net income.






40. Debt to be paid off in a period longer than one year.






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






42. The unit of service which we wish to know the cost for (hospital admission - classroom hour - course - etc.)






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






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






45. Ratios designed to answer the question: How profitable is the organization?






46. [(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






47. 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.






48. Current assets. Net working capital equals current assets –current liabilities.






49. 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.






50. Supplementing traditional sources of revenue with new sources.







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