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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. An organization whose profits can be distributed outside the organization and must pay taxes. Also called investor-owned organizations.
For-profit
Program budget
Top-down budgeting
Strategic financial planning
2. 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.
Opportunity cost
Line-item budget
Profit margin
Step-down method
3. An approach to analyzing the financial condition of an organization based on ratios calculated from line items found in the financial statements. There are four major categories of ratios: liquidity - profitability - capitalization - and activity.
Ratio analysis
Non-operating income
Fully allocated costs
Net assets to total assets
4. 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)
Allocation base
Mortgage
Basic accounting equation
Basis of Allocation
5. The total amount of multiyear debt due in future years.
Expansion decisions
Capital assets
Total asset turnover
Long-term debt - net of current portion
6. Service center costs are allocated to both mission centers and other service centers
Step Down
Investor
Permanently restricted net assets
Operating activities
7. Portion of profit an organization distributes to investors. By law - only investor-owned health care organizations can distribute dividends outside the organization.
Mission statement
Cost Accounting
Cost
Dividends
8. 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.
Lease
Coupon payment
Bond rating agency
Debt to equity
9. 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.
Capital
Activity Based Costing
Fixed assets
Revenue rate variance
10. 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.
Cash flows from investing activities
SWOT analysis
Accumulated depreciation
Capital investment decisions
11. Agencies that assess the "credit worthiness" of an organization. The two major rating agencies are Moody's and Standard & Poor.
Loan amortization schedule
Revenues
Asset Turnover Ratio
Bond rating agency
12. A situation in which if one project is implemented the other(s) will not be.
Mutually exclusive projects
Loan amortization schedule
Asset mix
Compounding
13. A budget in which line items are presented by program.
Budget
Program budget
Increase in unrestricted net assets
Service centers
14. Amounts earned by the organization from the provision of service or sale of goods.
Revenues
Performance measure
Traditional profit centers
Long-term debt - net of current portion
15. Amounts due to the organization from patients - third parties - and others.
Revenue enhancement
Billing - collections - and disbursement policies and procedures
Co-payments
Accounts receivable
16. The bottom line in the statement of operations. It includes such items as operating and non-operating income - contributions of long-lived assets - transfers to parent - and extraordinary items.
Fixed asset turnover
Increase in unrestricted net assets
Program budget
Footnotes
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.
Debt service coverage
Bonds
Cost
Step-down method
18. Expenses that have been incurred - but not yet paid.
Accrued expenses
Allocation
Capital appreciation
ROI
19. Costs that are traced to a cost object. See also Indirect costs and Cost object.
Balance sheet
Capital structure decision
Direct costs
Float
20. Organizational units primarily responsible for providing services and earning a profit based on the health care services provided.
Traditional profit centers
Final cost object
Strategic decisions
Mail float
21. Organizational units responsible for their own costs that provide administrative support to other organizational units or the organization
Cash budget
Administrative cost centers
Co-payments
Clinical cost centers
22. A note payable that has as collateral real assets and that requires periodic payments.
Short-term financing
Mortgage
Current assets
Investor
23. 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.
Interest
MV
Horizontal analysis
Properties and equipment - net
24. The difference between what was planned (budgeted) and what was achieved (actual).
Performance budget
Top-down budgeting
Budget variance
G & A expenses
25. 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
Capital budget
SWOT analysis
Permanently restricted net assets
ABC
26. The unit of service which we wish to know the cost for (hospital admission - classroom hour - course - etc.)
Statement of changes in net assets
Operating revenues
Incremental cash flows
Final cost object
27. Activities that provide guidance and feedback to keep the organization within its budget - such as staff meetings - regular reports - and bonuses.
Coupon payment
Dividends
Base Budget
Controlling activities
28. The cost of a capital asset (i.e. building or equipment) minus accumulated depreciation.
Beginning inventory
Excess of revenues over expenses
Book value
Discounted cash flows
29. (excess of revenues over expenses/total assets)- A measure of how much profit is earned for each dollar invested in assets. In for-profit organizations it is called return on assets and is calculated as: net income/assets.
Time value of money
Return on total assets
Annuity
Income from investments
30. Gross proceeds less the underwriter's fee and other issuance fees.
Net proceeds from a bond issuance
Current ratio
Bond rating
Operating expenses
31. (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
Operating expenses
Decentralization
Tax-exempt bonds
Creditor
32. Ratios designed to answer the question: How profitable is the organization?
Profitability ratios
Capital financing
Short-term financing
Investor
33. [Total assets/Net Assets]
Leverage
Net assets released from restriction
Capital structure ratios
Matching principle
34. Demonstrates the ability to pay off long term debt
Long Term Solvency ratios
Other income
Permanently restricted net assets
Collateral
35. The revenue and expense budgets of an organization.
Operating budget
Cash and cash equivalents
Income from investments
Non-current assets
36. 1) The returns that must be generated on a project to compensate the organization for its risk. 2) The returns the organization is foregoing by investing its money in one project as opposed to an alternative of similar risk. See also Cost of capital.
Net Assets to Total Assets
Long-term financing
Accounts payable
Discount rate
37. The process of adjusting for the time value of money backward in time to present value. See also Compounding.
Capital investment decisions
Discounting
Common costs
Transaction
38. Proceeds lost by foregoing other opportunities.
Hedge
Opportunity cost
Properties and equipment - net
Operating activities
39. [Net Assets/Total Assets]. This ratio reflects the proportion of total assets financed by equity.
Capital assets
Accrued expenses
Net Assets to Total Assets
Lease
40. A security interest in one or more assets granted to lenders in a secured loan.
Breakeven point
Operating activities
Top-down budgeting
Lien
41. Organizational units responsible for providing administrative support at a profit to other organizational units or to the organization as a whole and/or raising funds externally.
Current liabilities
Precautionary purposes
Administrative profit centers
Days cash on hand
42. A donation that has conditions which must be satisfied. See also Temporarily restricted net assets.
Fixed assets
Restricted donation
Administrative cost centers
Disbursement float
43. Cash inflows and outflows resulting from financing activities - such as obtaining grants or endowments - or from borrowing or paying back long-term debt.
Investment grade
Expense volume variance
Cost of goods sold
Cash flows from financing activities
44. The changes in cash resulting from the normal operating activities of the organization.
Debt to equity
Budget
Lender
Cash flows from operating activities
45. The expenses incurred from an organization's operating activities.
Return on net assets
Properties and equipment
Ending inventory
Operating expenses
46. One of the four major financial statements. It explains the changes in net assets from one period to the next on the balance sheet. Also called statement of changes in owners' equity in a for-profit business.
Revenues
Statement of changes in net assets
Depreciation
Matching principle
47. Donated assets that have restrictions on their use which will never be removed.
Cost
Permanently restricted net assets
Operating cash flows
Liquidity ratios
48. 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.
Coupon rate
Line of credit
Service centers
Financing activities
49. Previously restricted assets no longer restricted because the terms of the restriction have been met.
Ratio analysis
Net assets released from restriction
Capital appreciation
Revenues
50. A benefit paid for in advance (rent - insurance - etc.). Also called prepaid expense.
Prepaid assets
Tax-exempt bonds
Coupon rate
Final cost object