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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.
  • 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. Setting aside cash to meet unexpected demands - such as unexpected maintenance of a facility or piece of equipment.






2. That process of budgeting where the environmental assessment and planning of future activities are largely decided upon by a few individuals - and the budget is essentially dictated to the rest of the organization. Often called authoritarian approach






3. [Net Assets/Total Assets]. This ratio reflects the proportion of total assets financed by equity.






4. The process of distributing service center costs to mission centers - to determine the full cost of each mission center






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






6. Time delays in the billing and collection process. There are four categories of float: billing - collection - transit - and disbursement. An organization's goal is to optimize float for incoming revenues and outgoing bills.






7. The cost of activities that take place to produce the final cost object






8. The cash flows derived from an organization's operating activities.






9. The difference between what was planned (budgeted) and what was achieved (actual).






10. 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






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






12. The rate of return required to undertake a project. Also called the hurdle rate or discount rate.






13. {[cash + marketable securities)/[(operating expenses -depreciation)/ 365].- A ratio that indicates the number of days' worth of expenses an organization can cover with its most liquid assets (cash and marketable securities).






14. [Inventory/ (Cost of Goods Sold/365)]






15. A certificate attached to a bond representing the amount of interest to be paid to the holder.






16. 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.






17. 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.






18. 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.






19. 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.






20. 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.






21. [(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






22. A legal obligation to pay the holder of the note or lien.






23. The ability of an organization to find new ways to operate that obviate the need for certain classes of costs - such as doing procedures on an outpatient rather than inpatient basis.






24. (tax exempt revenue bonds)- Bonds in which the interest payments to the investor are exempt from the IRS. These bonds must be issued by an organization that has received tax exemption from the IRS and be used to fund projects that qualify as "exempt






25. 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.






26. 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.






27. The income (operating revenues -operating expenses) earned in non-health-care related activities.






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






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






30. The delay between providing the service and getting the bill to the patient or third party. There are two aspects of billing float: assembling the bill and delivering the bill to the patient or third-party payor.






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






32. Amounts earned by the organization from the provision of service or sale of goods.






33. 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.






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






35. 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.






36. [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).






37. The activities of an organization directly related to its main line of business.






38. Cash flows that occur solely as a result of undertaking a project. Basically the marginal difference between alternatives.






39. A borrower's assets on which a lender has legal claim if a borrower defaults on a loan.






40. 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.






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






42. 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.






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






44. (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;






45. A security whose interest rate does not change during the lifetime of the bond.






46. A donation that has conditions which must be satisfied. See also Temporarily restricted net assets.






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






48. The section of the expense budget that forecasts salary and benefits.






49. The amount of inventory on hand at the end of an accounting period. See also Beginning inventory.






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