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ACCA Financial Management
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Instructions:
Answer 50 questions in 15 minutes.
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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. [operating income/total operating revenues]- The proportion of profit remaining after subtracting total operating expenses from operating revenues.
Deferred revenues
Operating margin
Profit margin
Cost of goods sold
2. The difference between current assets and current liabilities.
Program budget
Net working capital
Cash equivalents
Expense budget
3. [Total Liabilities/ Net assets]
Asset mix
Debt to equity
Financing mix
Opportunity cost
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;
Return on net assets
Collections policies and procedures
Bond rating
Intermediate Cost Object
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.
Equity financing
Market rate of interest
Cash basis of accounting
Revenues
6. A measure of the resources used to generate revenue and/or provide a service. Often used synonymously with costs. See also Costs.
Mutually exclusive projects
Quick ratio
Financing activities
Expenses
7. The planning process that identifies the organization's mission and strategy in order to position itself for the future.
Strategic planning
Discounted cash flows
Decentralization
Annuity
8. The elapsed time between financial statements. Common accounting periods
Accounting period
Intermediate Cost Object
Indirect costs
Fixed Asset Turnover
9. Amounts due to the organization from patients - third parties - and others.
Capital appreciation
Accounts receivable
Top-down budgeting
Non-operating ratio
10. The amount of inventory on hand at the beginning of an accounting period. See also Ending inventory.
ABC
Beginning inventory
Days cash on hand
Permanently restricted net assets
11. Requiring the patient to pay part of his/her health care bill. These payments are used to prevent over-utilization of services.
Effectiveness
Administrative cost centers
Profit margin
Co-payments
12. A security interest in one or more assets granted to lenders in a secured loan.
Market rate of interest
Strategic planning
Lien
Fixed costs
13. Revenue is recorded when goods or services are delivered
Expenses
Parent organization
Non-regular cash flows
Realization principle
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.
Return on net assets
Capital assets
Assets
IRR
15. A catchall category for miscellaneous expenses and losses not included in other categories (telephone - travel - meals - etc.).
Other expenses
Perpetuity
Ratio analysis
Horizontal analysis
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.
Billing - collections - and disbursement policies and procedures
Horizontal analysis
Capital structure ratios
Line-item budget
17. The absence of risk in an investment.
Budget variance
Fixed (interest) rate debt
Final cost object
Certainty
18. Financing that will be paid back in less than one year.
Mission Center
Fixed labor budget
Short-term financing
Common costs
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.
Cash equivalents
Increase in unrestricted net assets
Lender
Coupon payment
20. The costs of a service after taking into account its direct and fair share of allocated costs.
Hedge
Certainty
Periodic payments
Fully 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.
Billing - collections - and disbursement policies and procedures
Average Days Inventory
Bonds
Direct costs
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
Net Assets
Statement of cash flows
Statement of operations
Dividends
23. Organizational units responsible for providing health care related services to clients - patients - or enrollees - and the related costs thereof.
Parent organization
Clinical cost centers
Disbursement float
Centralization
24. The section of the statement of cash flows that reports the total change in cash and cash equivalents over the accounting period.
Net increase (decrease) in cash and cash equivalents
Efficiency
Centralization
Fixed labor budget
25. Costs not traced to a cost object - but that must eventually be allocated across cost objects. See also Direct costs.
Indirect costs
Book value
Permanently restricted net assets
IRR
26. A benefit paid for in advance (rent - insurance - etc.). Also called prepaid expense.
Prepaid assets
G & A expenses
Controlling activities
Non-operating expenses
27. Ratios designed to answer the question: How profitable is the organization?
Excess of revenues over expenses
Profitability ratios
Fixed costs
Net assets released from restriction
28. The changes in cash resulting from the normal operating activities of the organization.
Top-down/bottom-up approach
Cash flows from operating activities
Net patient service revenue
Mission Center
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.
Operating cash flows
Donation
Co-payments
Annuity
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.
Horizontal analysis
Matching principle
Cash budget
Expense cost variance
31. Financial obligations that will be paid off over a time period longer than one year
Net assets released from restriction
Non-current liabilities
Annuity
Depreciation
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.
Controlling activities
Allowance for uncollectibles
Cash and cash equivalents
Final cost object
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.
Ratio analysis
Comparative approach
Present value of an annuity
Incremental cash flows
34. The revenue and expense budgets of an organization.
Operating budget
Other revenues
Cash flows from financing activities
Cost of goods sold
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.
Capital appreciation
Mission statement
Revenues
Inflation
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.
Operating expenses
Base Budget
Strategic planning
Investment grade
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.
Operating expenses
Basis of Allocation
Equity financing
Discount rate
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
Cost of goods sold
ABC
Strategic decisions
Revenue enhancement
39. Previously restricted assets no longer restricted because the terms of the restriction have been met.
Net working capital
Horizontal analysis
FV
Net assets released from restriction
40. A measure of the income earned from operating activities. It is calculated as: unrestricted revenues - gains - and other support -expenses and losses.
Return on net assets
Notes payable
Operating income
Donation
41. A note payable that has as collateral real assets and that requires periodic payments.
Mortgage
Asset Turnover Ratio
Lease
Capital assets
42. Organizational units responsible for providing services and controlling their costs. There are two major types: clinical cost centers and administrative cost centers.
Statement of changes in net assets
Inflation
Cost centers
Billing - collections - and disbursement policies and procedures
43. Price times total quantity.
Total revenue
Transaction
SWOT analysis
Top-down budgeting
44. Properties and equipment less accumulated depreciation.
Collateral
Loan amortization schedule
Properties and equipment - net
Net proceeds from a bond issuance
45. Any product - service - customer - contract - project - process or other work unit for which a separate cost measurement is desired.
Income from investments
Cost object
Collection float
Cost Accounting
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.
Coupon rate
Mission Center
Discounted cash flows
Budget
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.
Opportunity cost
Line-item budget
Perpetuity
Cash equivalents
48. Debt to be paid off in a period longer than one year.
Long-term financing
Non-regular cash flows
Times interest earned
Beginning inventory
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).
Net assets to total assets
Cost Accounting
Fixed Asset Turnover
Single/Simple Step
50. Amounts the organization is obligated to pay others - including suppliers and creditors.
Net present value
Accounts payable
Cash and cash equivalents
Current assets
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