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






2. (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;






3. The percentage of each asset relative to total assets.






4. [Total Revenues/ Total Assets]






5. 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.






6. (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.






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






8. The expenses incurred from an organization's operating activities.






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






10. 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.






11. [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.






12. [(cash + marketable securities)/current liabilities). A liquidity ratio that measures how much cash and marketable securities are available to payoff all current liabilities.






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






14. Decisions regarding the relative amount of debt and equity used to finance the organization's non-current assets.






15. Properties and equipment less accumulated depreciation.






16. The degree to which standards are met.






17. Cash inflows and outflows for the organization resulting from investing activities such as purchasing and selling investments or investing in itself by purchasing or selling non-current assets. It also includes transfers to and from the parent corpor






18. 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.






19. Expenses that have been incurred - but not yet paid.






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






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






22. Costs not traced to a cost object - but that must eventually be allocated across cost objects. See also Direct costs.






23. 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.






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






25. The current traded rate for similar risk securities.






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






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






28. Portion of profit an organization distributes to investors. By law - only investor-owned health care organizations can distribute dividends outside the organization.






29. A situation in which if one project is implemented the other(s) will not be.






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






31. The rise in an economy's general level of prices.






32. An entity that owns other companies.






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






34. Ratios that answer the question: How well is the organization positioned to meet its short-term obligations?






35. 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.






36. 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






37. Assets minus Liabilities. One of the three major categories on the balance sheet. Traditionally known as stockholders' equity in investor-owned organizations and fund balance in not-for-profit organizations. In not-for-profit health care organization






38. 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.






39. 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?






40. 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






41. Financial obligations that will be paid off over a time period longer than one year






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






43. [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).






44. {current liabilities/[(total expenses






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






46. The unit of service which we wish to know the cost for (hospital admission - classroom hour - course - etc.)






47. The balance sheet category that includes actual money on hand as well as money equivalents - such as savings and checking accounts. It excludes cash restricted as to its use for something other than current operations.






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. The central document of the planning/control cycle. It identifies revenues and resources that will be needed by an organization to achieve its goals and objectives.






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