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






2. Responsibility centers responsible for making a certain return on investments.






3. An organization whose profits can be distributed outside the organization and must pay taxes. Also called investor-owned organizations.






4. Directly related to the purposes of the organization and the delivery of services






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






6. Ratios that measure how the organization's assets are financed and/or whether the organization can take on new debt.






7. Expenses of the organization incurred in non-health-care related activities.






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






9. Agencies that assess the "credit worthiness" of an organization. The two major rating agencies are Moody's and Standard & Poor.






10. I) The cost to borrow money. It can be expressed in dollars or as a percentage. 2) Payment to creditors for the use of money on credit.






11. [(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.






12. [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






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






14. An investment that generates an annuity for an indefinite period of time - basically forever.






15. [(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






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






17. 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.






18. Costs that are traced to a cost object. See also Indirect costs and Cost object.






19. The purchase of assets with contributed and internally generated funds. See also Debt financing.






20. [(cash + marketable securities)/current liabilities). A liquidity ratio that measures how much cash and marketable securities are available to payoff all current liabilities.






21. (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;






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






23. 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.






24. 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.






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






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






27. Current year budget projected for the coming fiscal year assumes no program changes and adjust for price - workload - annualizations






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






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






30. An entity that gives capital to another entity in expectation of a financial or non-financial return.






31. [Surplus/Operating Revenues]






32. Demonstrates the extent to which the organization is earning money from its assets. Not usually as imp for NPs - varies w/ NP.






33. Operating income not reported elsewhere under revenues - gains - and other support.






34. The amount of supplies used to provide a service or good.






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






36. Non-operating income.






37. 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.






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






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






40. The degree to which standards are met.






41. An estimate/measure of how much a tangible asset (such as plant or equipment) has been "used up" during an accounting period. It is an expense that does not require any cash outflow under the accrual basis of accounting. See also Accumulated deprecia






42. Full-time equivalent employees. Two half-time employees equal one FTE.






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






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






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






46. An assignment or grading of the likelihood that an organization will not default on a bond.






47. Opposite of the authoritarian approach. The roles and responsibilities of the budgeting process are diffused throughout the organization. Often called the participatory approach.






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






49. Proceeds lost by foregoing other opportunities.






50. 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.