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ACCA Financial Management

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  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. 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?






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.






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






4. Ratios that measure how efficiently an organization is using its assets to produce revenues.






5. Recording expenses associated with making revenue at the same time as revenues are recognized






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






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






8. The category of assets summarizing the amount of the major capital investments of the facility in plant - property - and equipment (PP&E). Plant means buildings - property is land - and equipment includes a wide variety of durable items from beds to






9. The system of accounting that recognizes revenues when earned and expenses when resources are used. This method is used by most non-governmental health care organizations. See also Cash basis of accounting.






10. [Net Accounts Receivable/(Revenue/356)]






11. [Total assets/Net Assets]






12. Revenues generated from an organization's operating activities.






13. Amounts due to the organization from patients - third parties - and others.






14. The budget used to forecast operating expenses.






15. The section of the statement of cash flows that reports the total change in cash and cash equivalents over the accounting period.






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






17. Irregular cash flows - typically occurring at the end of the life of a project.






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






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






20. A balance sheet account that estimates the total amount of customer accounts receivable that will not be collected. It is also called allowance for bad debts and allowance for doubtful accounts.






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






22. [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.






23. The amount of inventory on hand at the beginning of an accounting period. See also Ending inventory.






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






25. Price times total quantity.






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






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






28. 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.






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






30. Operating income plus other income. This is analogous to net income before taxes in for-profit entities.






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






32. 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.






33. 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.






34. The degree to which standards are met.






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






36. 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.






37. Policies and procedures that address when and how to collect revenues - such as paying at time of service - sending accounts to collection agencies - and writing off accounts as bad debt.






38. Decisions regarding the acquisition of capital assets. The capital investment decision should be separate from the decision on how to finance capital assets.






39. What a series of equal payments in the future is worth today taking into account the time value of money.






40. [(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






41. Revenue is recorded when goods or services are delivered






42. The section of the expense budget that forecasts the cost of those supplies that will not vary as a direct result of changes in the amount of services provided (such as administrative office supplies).






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






44. Ratios designed to answer the question: How profitable is the organization?






45. The current traded rate for similar risk securities.






46. Assets that provide service for a period exceeding one year. Sometimes referred to as long-term assets.






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






48. 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.






49. A benefit paid for in advance (rent - insurance - etc.). Also called prepaid expense.






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







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