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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. (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.






2. [(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






3. The difference between what was planned (budgeted) and what was achieved (actual).






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. An entity that owns other companies.






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






7. 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.






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






9. Being subject to sanctions with respect to carrying out responsibilities.






10. Generally - assets that will be used or consumed within one year. Some organizations use a period of less than one year.






11. [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






12. 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.






13. 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






14. An organization's financial obligations that are to be paid within one year.






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






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






17. Revenues of the organization earned in non-healthcare related activities.






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






19. [(cash + marketable securities + net accounts receivable)/current liabilities)- A measure of the organization's liquidity.






20. The amount remaining after subtracting variable costs from revenues. When the organization is not at capacity - it is the "profit" the organization makes on providing each new unit that is available to cover all other costs. Contribution margin may b






21. A contract in which the lessee (user) agrees to pay the leassor (owner) a specific amount over a period of time for the use of an asset.






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






23. Future value. What an amount invested today (or a series of payments made over time) will be worth at a given time in the future using the compound interest method. This accounts for the time value of money. See also Present value.






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






25. General and administrative expenses. Operating expenses that are not contained in the labor or supplies budgets.






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






27. Requiring the patient to pay part of his/her health care bill. These payments are used to prevent over-utilization of services.






28. A contract between a lender and a potential borrower preauthorizing the potential borrower's right to borrow up to a specific amount on request as long as they fulfill the terms and conditions of the contract. Also called a letter of credit.






29. Cash flows that have been adjusted to their present value to account for the cost of capital (over time) and the time value of money.






30. Looks at the percentage change in a line item's value from one year to the next using the formula: [(subsequent year -base year)/base year) x 100. See also Vertical analysis.






31. The difference between current assets and current liabilities.






32. [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.






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






34. 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.






35. Supplementing traditional sources of revenue with new sources.






36. Gross proceeds less the underwriter's fee and other issuance fees.






37. Amounts given to the organization for operating purposes - such as governmental appropriations and unrestricted donations.






38. 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






39. 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.






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






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






42. [net assets/total assets)- This ratio reflects the proportion of total assets financed by equity. In for-profit organizations it is called the equity to total asset ratio and is calculated using the formula [owners' equity/total assets).






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






44. Demonstrates the ability to pay off long term debt






45. Price times total quantity.






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






47. Financing that will be paid back in less than one year.






48. (non-operating revenues/total operating revenues)- A ratio that reflects how dependent the organization is on non-patient care related net income.






49. IA category of non-current assets not intended to be used for operations - but only for capital appreciation and dividends - and that will be held for a period longer than one year.






50. Amounts the organization is obligated to pay others - including suppliers and creditors.