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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. [operating income/total operating revenues]- The proportion of profit remaining after subtracting total operating expenses from operating revenues.






2. The difference between current assets and current liabilities.






3. [Total Liabilities/ Net assets]






4. (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;






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






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






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






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






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






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






11. Requiring the patient to pay part of his/her health care bill. These payments are used to prevent over-utilization of services.






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






13. Revenue is recorded when goods or services are delivered






14. Internal rate of return. The percentage return on an investment. It is the rate of return at which the net present value equals zero. Often used as a comparison to cost of capital.






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






16. 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.






17. The absence of risk in an investment.






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






19. An entity that temporarily grants the use of money or an asset to another in return for compensation - usually in the form of interest.






20. The costs of a service after taking into account its direct and fair share of allocated costs.






21. A form of long-term financing whereby the issuer receives cash and in return issues a note called a bond. By issuing the bond - the issuer agrees to make principal and/or interest payments on specific dates to the holders of the bond.






22. 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






23. Organizational units responsible for providing health care related services to clients - patients - or enrollees - and the related costs thereof.






24. The section of the statement of cash flows that reports the total change in cash and cash equivalents over the accounting period.






25. Costs not traced to a cost object - but that must eventually be allocated across cost objects. See also Direct costs.






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






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






28. The changes in cash resulting from the normal operating activities of the organization.






29. 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.






30. [(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.






31. Financial obligations that will be paid off over a time period longer than one year






32. 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.






33. 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.






34. The revenue and expense budgets of an organization.






35. 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.






36. Bonds that have received a rating ranging from AM to BBB (at S&P) - or Aaa to Bbb (Moody's) - of which the highest are called quality ratings.






37. 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.






38. 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






39. Previously restricted assets no longer restricted because the terms of the restriction have been met.






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






41. A note payable that has as collateral real assets and that requires periodic payments.






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






43. Price times total quantity.






44. Properties and equipment less accumulated depreciation.






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






46. 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.






47. 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.






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






49. [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).






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







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