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ACCA Financial Management

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  • Answer 50 questions in 15 minutes.
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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. [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.






2. 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.






3. 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






4. How an organization chooses to finance its working capital needs.






5. 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.






6. A certificate attached to a bond representing the amount of interest to be paid to the holder.






7. 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.






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






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






10. Previously restricted assets no longer restricted because the terms of the restriction have been met.






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






12. The degree of dispersion of responsibility within an organization. See also Centralization.






13. 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.






14. Demonstrates the ability to pay off long term debt






15. The difference between current assets and current liabilities.






16. An entity that gives capital to another entity in expectation of a financial or non-financial return.






17. An entity that owns other companies.






18. Recording expenses associated with making revenue at the same time as revenues are recognized






19. 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.






20. [Total Revenues/ Total Assets]






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






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






23. Price times total quantity.






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






25. Current assets. Net working capital equals current assets –current liabilities.






26. 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.






27. The budget format that lists revenues and expenses by category - such as labor - travel - and supplies. Categories are sometimes broken down into sub-categories. See also Performance budget and Program budget.






28. [Net Accounts Receivable/(Revenue/356)]






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






30. Assets that have a physical presence.






31. The planning process that identifies the organization's mission and strategy in order to position itself for the future.






32. A catchall category for miscellaneous expenses and losses not included in other categories (telephone - travel - meals - etc.).






33. Assets that provide service for a period exceeding one year. Sometimes referred to as long-term assets.






34. Private entity or individual who makes a donation






35. A series of equal cash flows made or received at regular time intervals. Ordinary annuities occur at the end of each period whereas annuities due occur at the beginning of each period.






36. Costs that are traced to a cost object. See also Indirect costs and Cost object.






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






38. Traces indirect costs to activity that uses them. Overhead collected in pools and distributed to cost object by cost drivers.






39. 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






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






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






42. Funds provided by a private entity or individual without the requirement of repayment. Donations can either be restricted or unrestricted.






43. 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.






44. [Total assets/Net Assets]






45. Each service center






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. 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.






48. Time delays in the billing and collection process. There are four categories of float: billing - collection - transit - and disbursement. An organization's goal is to optimize float for incoming revenues and outgoing bills.






49. The degree to which standards are met.






50. Costs that stay the same in total over the relevant range as volume increases - but that change inversely on a per unit basis.







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