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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. Bonds that have received a rating ranging from AM to BBB (at S&P) - or Aaa to Bbb (Moody's) - of which the highest are called quality ratings.






2. [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






3. [Total assets/Net Assets]






4. The bottom area of the financial statements that contains key information not available in the body of the statements - such as how charity is determined - the composition of investments - which assets are restricted - and the depreciation method.






5. 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






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






7. Cash inflows and outflows resulting from financing activities - such as obtaining grants or endowments - or from borrowing or paying back long-term debt.






8. Supplementing traditional sources of revenue with new sources.






9. A measure of the income earned from operating activities. It is calculated as: unrestricted revenues - gains - and other support -expenses and losses.






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






11. I) Organizations that have a special designation because they provide goods or services that result in needed community benefit. In turn - such organizations are not required to pay most taxes. 2) The designation of an organization as one that is not






12. A method by which the organization develops its strategies and budgets to meet future financial targets.






13. The costs of a service after taking into account its direct and fair share of allocated costs.






14. The cost of a capital asset (i.e. building or equipment) minus accumulated depreciation.






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






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






17. The current traded rate for similar risk securities.






18. The budget that forecasts the operating and - in some cases - the non- operating revenues that will be earned during the budget period.






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






20. 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.






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






22. The sources of funds to finance the non-current assets of the organization. Also the debt and equity of the organization.






23. A method to evaluate the feasibility of an investment by determining how long it would take until the initial investment is recovered. This method does not account for the time value of money.






24. The process of adjusting for the time value of money backward in time to present value. See also Compounding.






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






26. 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.






27. 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






28. Budgets that typically cover two to five years.






29. [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.






30. 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.






31. [Surplus/Operating Revenues]






32. Service center costs are allocated to both mission centers and other service centers






33. 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.






34. Demonstrates the ability to pay off long term debt






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






36. 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






37. The cumulative amount of depreciation recognized on an asset since its purchase. An asset's book value is equal to its purchase price less the amount of accumulated depreciation.






38. 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.






39. The revenue that the organization has a right to collect. It is computed as: gross patient service revenues – contractual allowance and charity care.






40. Organizational units responsible for providing health care related services to clients - patients - or enrollees - and the related costs thereof.






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






42. [(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






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






44. 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.






45. 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.






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






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






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






49. The amount expected to be collected from payors. It is calculated as: gross accounts receivable – discounts and allowances – allowance for un-collectibles.






50. Activities that provide guidance and feedback to keep the organization within its budget - such as staff meetings - regular reports - and bonuses.







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