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ACCA Financial Management

  • 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. Each service center

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

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

4. The revenue and expense budgets of an organization.

5. 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.

6. [(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

7. (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;

8. [total revenues/total assets].- This ratio measures the overall efficiency of the organization's assets to produce revenue. It answers the question: For every dollar in assets - how many dollars of revenue are being generated?

9. 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.

10. 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

11. The budget that projects the organization's cash inflows and outflows. The bottom line in the cash budget is the amount of cash available at the end of the period.

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

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

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

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

16. 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.

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

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

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

20. 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.

21. The cost of the supplies on hand at the beginning of the year.

22. If a project is undertaken - these cash flows are the indirect increases or decreases in cash flows that will occur elsewhere in the organization.

23. 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)

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

25. Private entity or individual who makes a donation

26. The current traded rate for similar risk securities.

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

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

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

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

31. The gradual process of paying off debt through a long series of equal periodic payments. Each payment covers a portion of the principal plus current interest. The periodic payments are equal over the lifetime of the loan - but the proportion going to

32. Bonds that hold the health care provider's real property and equipment as security or collateral in case of default.

33. {[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).

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

35. Any product - service - customer - contract - project - process or other work unit for which a separate cost measurement is desired.

36. A budget in which line items are presented by program.

37. 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.

38. The organization's legal obligations to pay its creditors. Liabilities are classified as current and non-current. Liabilities are one of the three major categories on the balance sheet and are part of the fundamental accounting equation.

39. Health maintenance organization. Entities that receive premium payments from enrollees with the understanding that the HMO will be financially responsible for all predefined health care required by its enrollees for a specified period of time. The he

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

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

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

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

44. 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.

45. 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

46. Assets that have restrictions on their use which will be removed either with the passage of time or the occurrence of some event.

47. Financial and non-financial standards against which organizational performance is measured.

48. A schedule detailing the principal and interest payments required to repay a loan. Typically - the periodic payments remain unchanged - but the proportion used to payoff the principal increases over time.

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

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