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






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






3. 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.






4. 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






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






6. 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.






7. [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






8. The amount of time between when an organization receives a service and pays for it.






9. Revenues of the organization earned in non-healthcare related activities.






10. The revenue and expense budgets of an organization.






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






12. Being subject to sanctions with respect to carrying out responsibilities.






13. [(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






14. 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.






15. {current liabilities/[(total expenses






16. [(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.






17. The current traded rate for similar risk securities.






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






19. Portion of the profits the organization keeps in-house to use in support of its mission.






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






21. 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.






22. [total revenues/net plant & equipment]- This ratio measures the number of dollars generated for each dollar invested in an organization's plant and equipment.






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






24. [Total Revenues/ Total Assets]






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






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






27. Funds provided by a private entity or individual without the requirement of repayment. Donations can either be restricted or unrestricted.






28. 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.






29. 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.






30. 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.






31. 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.






32. The total amount of multiyear debt due in future years.






33. The resources owned by the organization. It is one of the three major categories on the balance sheet.






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






35. A contract in which the lessee (user) agrees to pay the leassor (owner) a specific amount over a period of time for the use of an asset.






36. The method by which to distribute service center costs to mission centers; in general the one that most accurately measures use by the cost centers that receives its services (food service - # of meals - hospital laundry - # of pounds processed)






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






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






39. process of measuring the resources (costs) used to produce results.






40. 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?






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






42. [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.






43. The percentage of each asset relative to total assets.






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






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






46. The increase in the value of an investment from the time it is purchased until the time it is sold.






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






48. Future value. What an amount invested today (or a series of payments made over time) will be worth at a given time in the future using the compound interest method. This accounts for the time value of money. See also Present value.






49. A technique to evaluate an organization's strengths - weaknesses - opportunities - and threats. Also called a WOTS-up analysis.






50. Properties and equipment less accumulated depreciation.