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Test your basic knowledge |
ACCA Financial Management
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Subjects
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certifications
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business-skills
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acca
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
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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. Current assets. Net working capital equals current assets –current liabilities.
Accountability
Working capital
Expenses
Liquidity ratios
2. I) Calculating interest using the compound interest method. 2) Adjusting for the time value of money forward in time to a future value. See also Compound interest method and Discounting.
Float
Non-regular cash flows
Compounding
Current liabilities
3. Ratios that measure how the organization's assets are financed and/or whether the organization can take on new debt.
Capital structure ratios
Fixed (interest) rate debt
Asset Management ratios
Parent organization
4. When different products use overhead related services in different proportions - and when the costs of those services are significantly different - The situation present when products consume overhead in different proportions.
Accounts receivable
Line-item budget
Debt to equity
Product diversity
5. An entity that temporarily grants the use of money or an asset to another in return for compensation - usually in the form of interest.
Discounted cash flows
Lender
Float
Deferred revenues
6. Price times total quantity.
Coupon payment
Responsibility center
Total revenue
Restricted donation
7. Organizational units primarily responsible for ensuring that services are provided to a population in a manner that meets the volume and quality requirements of the organization. Service centers are the most basic type of responsibility centers.
Service centers
Discounted cash flows
Book value
Activity Based Costing
8. The amount expected to be collected from payors. It is calculated as: gross accounts receivable – discounts and allowances – allowance for un-collectibles.
Return on total assets
Co-payments
Net accounts receivable
Cost object
9. Cash inflows and outflows for the organization resulting from investing activities such as purchasing and selling investments or investing in itself by purchasing or selling non-current assets. It also includes transfers to and from the parent corpor
Mortgage
Long-term financing
Cash flows from investing activities
Periodic payments
10. 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
Return on total assets
ABC
Cash basis of accounting
Opportunity cost
11. Ratios that answer the question: How well is the organization positioned to meet its short-term obligations?
Net assets to total assets
Ratio analysis
Liquidity ratios
Operating income
12. The difference between current assets and current liabilities.
Net working capital
ABC
Perpetuity
Capital budget
13. Assets that have a useful life greater than one year - such as plant - property - and equipment. Plant and equipment are depreciated over time; land (property) is not.
SWOT analysis
Compounding
Capital
Capital assets
14. 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.
Long-term investments
Responsibility center
Notes payable
Capital investment decisions
15. Full-time equivalent employees. Two half-time employees equal one FTE.
Administrative cost centers
Present value of an annuity
Cash flows from operating activities
FTE
16. The revenue that the organization has a right to collect. It is computed as: gross patient service revenues – contractual allowance and charity care.
Net patient service revenue
Ending inventory
Net assets to total assets
Temporarily restricted net assets
17. The section of the statement of cash flows that reports the total change in cash and cash equivalents over the accounting period.
Operating cash flows
Net increase (decrease) in cash and cash equivalents
Transaction
Accumulated depreciation
18. [Total Liabilities/ Net assets]
Budget variance
FTE
Debt to equity
Certainty
19. An amount owed to the organization that will not be paid. Charity care is not considered a bad debt since nothing is owed to the organization for services provided.
Ratio analysis
Bad debt
Incremental cash flows
Capital structure decision
20. Amounts earned by the organization from the provision of service or sale of goods.
Permanently restricted net assets
Restricted donation
Revenues
Prepaid assets
21. A security whose interest rate does not change during the lifetime of the bond.
Discounting
Acid test ratio
Fixed (interest) rate debt
Float
22. [Total assets/Net Assets]
Net Assets to Total Assets
Accounts receivable
Non-operating revenues
Leverage
23. The cost of a capital asset (i.e. building or equipment) minus accumulated depreciation.
Precautionary purposes
Return on total assets
Collection float
Book value
24. An entity that gives capital to another entity in expectation of a financial or non-financial return.
Collateral
Other revenues
Investor
Net accounts receivable
25. 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
Long-term investments
Net Assets
Net increase (decrease) in cash and cash equivalents
Lien
26. A note payable that has as collateral real assets and that requires periodic payments.
Notes payable
Mortgage
Return on net assets
Allocation
27. 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
Amortization of a loan
Spillover cash flows
Capital structure decision
Operating revenues
28. The budget that forecasts the operating and - in some cases - the non- operating revenues that will be earned during the budget period.
Revenue budget
Asset mix
Cost of capital
Service centers
29. A section of the statement of cash flows used to report such activities as borrowing and paying back loans.
Indirect costs
Intermediate Cost Object
Beginning inventory
Financing activities
30. 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.
Traditional profit centers
Line-item budget
Notes payable
Cost of capital
31. 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)
Efficiency
G & A expenses
Basis of Allocation
Return on net assets
32. The amount the holder of the coupon receives periodically - usually semiannually. Over the year - it equals the coupon rate times the face value of the bond.
Indirect costs
Other income
Coupon payment
FV
33. 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.
Ratio analysis
Operating activities
Net present value
Assets
34. Cash flows that have been adjusted to their present value to account for the cost of capital (over time) and the time value of money.
Discounted cash flows
Market rate of interest
Centralization
Equity financing
35. Ratios designed to answer the question: How profitable is the organization?
Retained earnings
Expense volume variance
Profitability ratios
Allocation
36. 1) The resources used to produce a good or service. 2) The amount of cash given up in a transaction. 3) Price. The first definition is based on accrual accounting and the second on cash accounting.
Breakeven point
Cost
IRR
Direct costs
37. [(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
Expense volume variance
Net patient service revenue
Parent organization
Equity financing
38. The process of adjusting for the time value of money backward in time to present value. See also Compounding.
Discounting
Cost object
Accrual basis of accounting
Administrative cost centers
39. The amount of time between when an organization receives a service and pays for it.
Ratio analysis
Other expenses
Statement of cash flows
Disbursement float
40. The section of the expense budget that forecasts salary and benefits.
Capital
Retained earnings
Return on total assets
Fixed labor budget
41. A method of allocating costs that are not directly paid for (utilities - rent - administration) into those products or services to which payment is attached (day of care - a brief visit). See also Activity-based costing.
Cash flows from operating activities
Cash budget
Activity ratios
Step-down method
42. The sources of funds to finance the non-current assets of the organization. Also the debt and equity of the organization.
Coupon rate
Capital
Certainty
Net increase (decrease) in cash and cash equivalents
43. 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.
Accounts payable
FV
Permanently restricted net assets
Average payment period
44. Market value. The price at which something - such as bonds and stocks - could be bought or sold today on the open market.
Short-term financing
Time value of money
Leverage
MV
45. 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).
Administrative cost centers
Opportunity cost
Deferred revenues
Debt service coverage
46. 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
Statement of operations
Product diversity
Long Term Solvency ratios
Accounts payable
47. Amounts the organization is obligated to pay others - including suppliers and creditors.
Capital structure ratios
Liabilities
Accounts payable
Book value
48. Cash inflows and outflows resulting from financing activities - such as obtaining grants or endowments - or from borrowing or paying back long-term debt.
Quick ratio
Average Days Receivable
Service centers
Cash flows from financing activities
49. A security interest in one or more assets granted to lenders in a secured loan.
Capital assets
Net present value
Cost
Lien
50. 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.
Loan amortization schedule
SWOT analysis
Fixed asset turnover
Profit margin