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ACCA Financial Management
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Instructions:
Answer 50 questions in 15 minutes.
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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. Financial obligations that will be paid off over a time period longer than one year
Collections policies and procedures
Non-current liabilities
Intermediate Cost Object
Times interest earned
2. Organizational units responsible for providing services and controlling their costs. There are two major types: clinical cost centers and administrative cost centers.
Basic accounting equation
Excess of revenues over expenses
Activity Based Costing
Cost centers
3. [(cash + marketable securities + net accounts receivable)/current liabilities)- A measure of the organization's liquidity.
Quick ratio
Capital investment decisions
Expense volume variance
Discounted cash flows
4. [Total Revenues/(Net Fixed Assets)]. This ratio measures the number of dollars generated for each dollar invested in an organization's fixed assets (i.e. plant and equipment).
Direct costs
Profit margin
Fixed Asset Turnover
Cost of goods sold
5. Monies received that have not yet been earned. One of the most common deferred revenues is the receipt of capitation on the basis of per member per month (PMPM).
Deferred revenues
Operating budget
Profitability ratios
Coupon rate
6. 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.
Assets
Debt to equity
Coupon payment
Financing mix
7. Opposite of the authoritarian approach. The roles and responsibilities of the budgeting process are diffused throughout the organization. Often called the participatory approach.
Cash equivalents
Top-down/bottom-up approach
Current liabilities
Non-operating expenses
8. When different products use overhead related services in different proportions - and when the costs of those services are significantly different - The situation present when products consume overhead in different proportions.
Long-term financing
Accountability
Discounting
Product diversity
9. (non-operating revenues/total operating revenues)- A ratio that reflects how dependent the organization is on non-patient care related net income.
Efficiency
Administrative cost centers
Non-operating ratio
Cash and cash equivalents
10. [operating income/total operating revenues]- The proportion of profit remaining after subtracting total operating expenses from operating revenues.
Operating margin
Quick ratio
Strategic decisions
Expense volume variance
11. A form of long-term financing whereby the issuer receives cash and in return issues a note called a bond. By issuing the bond - the issuer agrees to make principal and/or interest payments on specific dates to the holders of the bond.
Operating income
Capital structure decision
Total asset turnover
Bonds
12. An entity that gives capital to another entity in expectation of a financial or non-financial return.
Fixed labor budget
Opportunity cost
Perpetuity
Investor
13. An assignment or grading of the likelihood that an organization will not default on a bond.
Bond rating
Transaction
Base Budget
Ending inventory
14. Ratios that measure how efficiently an organization is using its assets to produce revenues.
Cash equivalents
Operating activities
Activity ratios
Cash and cash equivalents
15. The activities of an organization directly related to its main line of business.
Discounting
Direct costs
Operating activities
Cost Accounting
16. Cash flows that occur solely as a result of undertaking a project. Basically the marginal difference between alternatives.
Contribution margin
Incremental cash flows
Realization principle
Administrative profit centers
17. The amount of time between when an organization receives a service and pays for it.
HMO
Total revenue
Expansion decisions
Disbursement float
18. 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.
Financing mix
Leverage
Discount rate
Operating expenses
19. A section of the statement of cash flows used to report such activities as borrowing and paying back loans.
Discount rate
Activity ratios
Financing activities
Comparative approach
20. The cost of a capital asset (i.e. building or equipment) minus accumulated depreciation.
Footnotes
Total asset turnover
Profitability ratios
Book value
21. That process of budgeting where the environmental assessment and planning of future activities are largely decided upon by a few individuals - and the budget is essentially dictated to the rest of the organization. Often called authoritarian approach
Budget variance
Top-down budgeting
Mutually exclusive projects
Cash basis of accounting
22. Costs that are traced to a cost object. See also Indirect costs and Cost object.
Ending inventory
Acid test ratio
Direct costs
Cash flows from financing activities
23. Ratios designed to answer the question: How profitable is the organization?
Excess of revenues over expenses
Matching principle
Allocation
Profitability ratios
24. [Total assets/Net Assets]
Operating income
Accounts receivable
Accrued expenses
Leverage
25. 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)
Net working capital
Basic accounting equation
Basis of Allocation
Accrual basis of accounting
26. 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.
Bond rating agency
Ratio analysis
Fully allocated costs
Indirect costs
27. [total revenues/net plant & equipment]- This ratio measures the number of dollars generated for each dollar invested in an organization's plant and equipment.
Return on total assets
Mission Center
Balance sheet
Fixed asset turnover
28. 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.
Capital structure ratios
Cost
Lease
Interest
29. Financing used expressly for the purchase of non-current assets.
Net increase (decrease) in cash and cash equivalents
Other support
Parent organization
Capital financing
30. Capital investment decisions designed to increase an organization's strategic position.
Strategic decisions
Investment centers
Asset mix
Budget variance
31. The planning process that identifies the organization's mission and strategy in order to position itself for the future.
Expense cost variance
Strategic planning
Traditional profit centers
Non-current assets
32. The elapsed time between financial statements. Common accounting periods
Allowance for uncollectibles
Bond rating agency
Leverage
Accounting period
33. 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.
Net assets to total assets
Debt to equity
Discounting
Discounted cash flows
34. [(excess of revenues over expenses + interest expense)/interest expense].- This ratio enables creditors and lenders to evaluate an organization's ability to generate earnings necessary to meet interest expense requirements. In for-profit organization
Incremental cash flows
Ending inventory
Discounted cash flows
Times interest earned
35. 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
Volume diversity
Operating expenses
36. 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
Discounted cash flows
Cash flows from investing activities
Non-operating income
Bonds
37. 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.
Cash flows from financing activities
Notes payable
Activity Based Costing
Footnotes
38. 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.
Accrual basis of accounting
Bond rating
Decentralization
Administrative profit centers
39. An amount owed to the organization that will not be paid. Charity care is not considered a bad debt since nothing is owed to the organization for services provided.
Bad debt
Fixed labor budget
Times interest earned
Revenues
40. A measure of the resources used to generate revenue and/or provide a service. Often used synonymously with costs. See also Costs.
Capital appreciation
Expenses
Step Down
Horizontal analysis
41. An entity that owns other companies.
Parent organization
Lease
Acid test ratio
Average payment period
42. The time between the issuance of the bill and the time funds are available for use by the health care organization. It has two components: mail float and processing float.
Accrued expenses
Collection float
Billing - collections - and disbursement policies and procedures
Capital structure decision
43. Assets that provide service for a period exceeding one year. Sometimes referred to as long-term assets.
Net working capital
Total asset turnover
Common costs
Non-current assets
44. [(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
Final cost object
SWOT analysis
Compounding
Debt service coverage
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
Not-for-profit
Tax-exempt bonds
Horizontal analysis
Accounts receivable
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.
Other support
Cash basis of accounting
Average Days Receivable
Asset mix
47. The idea that a dollar today is worth more than a dollar in the future.
Time value of money
Realization principle
Line of credit
Net assets released from restriction
48. Bonds that hold the health care provider's real property and equipment as security or collateral in case of default.
Mortgage bonds
Bond rating
Non-operating income
Profitability ratios
49. Generally - assets that will be used or consumed within one year. Some organizations use a period of less than one year.
Current assets
Working capital
FTE
Bad debt
50. [(actual volume -budgeted volume) x budgeted cost per unit).- The portion of total variance that is due to actual volume being either higher or lower than budgeted volume. It is the difference between the expenses forecast in the original budget and
Accountability
Operating budget
Efficiency
Expense volume variance
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