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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. 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.
Cash budget
Net working capital
Average payment period
Net assets to total assets
2. Service center costs are allocated to both mission centers and other service centers
Acid test ratio
Responsibility center
Step Down
Profitability ratios
3. Ratios that answer the question: How well is the organization positioned to meet its short-term obligations?
Non-operating ratio
Balance sheet
Liquidity ratios
Collections policies and procedures
4. An entity that sells bonds in order to raise money.
Beginning inventory
Issuer
Quick ratio
Loan amortization schedule
5. A benefit paid for in advance (rent - insurance - etc.). Also called prepaid expense.
Fixed Asset Turnover
Centralization
Capital
Prepaid assets
6. Amounts the organization is obligated to pay others - including suppliers and creditors.
Accounts payable
Cost of capital
Co-payments
Allocation base
7. 1) The degree to which power and authority is concentrated in an organization. 2) The degree to which a variety of services are offered at a single location.
Accounting period
Centralization
Net patient service revenue
Strategic decisions
8. [(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
Annuity
Times interest earned
Clinical cost centers
G & A expenses
9. 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.
Net proceeds from a bond issuance
Line-item budget
Bond rating agency
Non-operating income
10. 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
Properties and equipment
ABC
Revenues
Opportunity cost
11. Responsibility centers responsible for making a certain return on investments.
Return on total assets
Investment centers
Average Days Inventory
Present value of an annuity
12. 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
Billing float
Capital budget
Amortization of a loan
Asset Management ratios
13. 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.
Statement of changes in net assets
Non-operating expenses
Balance sheet
Strategic decisions
14. 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.
Basic accounting equation
Billing float
Line of credit
Traditional profit centers
15. 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?
Performance measure
Statement of cash flows
Billing float
Tax-exempt bonds
16. The amount of the total revenue variance that occurs because the actual average rate charged varies from that originally budgeted. It can be calculated using the formula: (actual rate -budgeted rate) x actual volume.
Revenue rate variance
Properties and equipment - net
Cash basis of accounting
Asset mix
17. Assets that have a physical presence.
Current liabilities
Asset mix
Tangible assets
Long-term financing
18. A category of income that includes unrestricted interest - dividends - and gains from the sale of unrestricted investments.
Profitability ratios
Fixed Asset Turnover
Income from investments
Return on total assets
19. Revenue is recorded when goods or services are delivered
Bond rating
Realization principle
Collections policies and procedures
Accrual basis of accounting
20. Series of payments over time - such as interest paid to bondholders.
Statement of cash flows
Periodic payments
Hedge
Asset mix
21. 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
Properties and equipment - net
Net Assets
Certainty
Parent organization
22. 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
Dividends
Increase in unrestricted net assets
Top-down/bottom-up approach
HMO
23. Assets = Liabilities + Net Assets (aka Equity).
Excess of revenues over expenses
Basic accounting equation
Top-down/bottom-up approach
Cash flows from operating activities
24. [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
ROI
Long-term debt to net assets ratio
Administrative profit centers
Long-term investments
25. A situation in which if one project is implemented the other(s) will not be.
G & A expenses
Profit margin
Discounted cash flows
Mutually exclusive projects
26. The amount expected to be collected from payors. It is calculated as: gross accounts receivable – discounts and allowances – allowance for un-collectibles.
Net accounts receivable
Net assets released from restriction
Budget variance
HMO
27. Capital investment decisions designed to increase the operational capability of a health care organization.
Expansion decisions
Centralization
Billing float
MV
28. Decisions regarding the acquisition of capital assets. The capital investment decision should be separate from the decision on how to finance capital assets.
Matching principle
Billing - collections - and disbursement policies and procedures
Capital investment decisions
Lease
29. Tools used to increase the amount of cash available to the organization. The objective of billing - credit - and collection policies is to accelerate cash receipts; the objective of cash disbursement policies is to slow down cash outflows.
Debt to equity
Billing - collections - and disbursement policies and procedures
Step Down
Top-down/bottom-up approach
30. A budget which presents not only line items and programs but also the performance goals that each program can be expected to attain. See also Line item budget and Program budget.
Fixed costs
Cash basis of accounting
Indirect costs
Performance budget
31. Expenses that have been incurred - but not yet paid.
Accrued expenses
Activity Based Costing
For-profit
Net working capital
32. An entity that gives capital to another entity in expectation of a financial or non-financial return.
Investor
Multiyear budget
Operating cash flows
Tangible assets
33. Amounts due to the organization from patients - third parties - and others.
Performance measure
Accounts receivable
Balance sheet
Discounting
34. The section of the expense budget that forecasts the cost of those supplies that will not vary as a direct result of changes in the amount of services provided (such as administrative office supplies).
Expansion decisions
Non-current liabilities
Billing - collections - and disbursement policies and procedures
Fixed supplies budget
35. Traces indirect costs to activity that uses them. Overhead collected in pools and distributed to cost object by cost drivers.
Expense cost variance
Activity Based Costing
Bonds
Investment centers
36. [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).
Non-operating expenses
Revenue enhancement
Fixed Asset Turnover
Cost avoidance
37. [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.
Current ratio
Balance sheet
Program budget
Collection float
38. 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.
Contribution margin
Ratio analysis
Not-for-profit
Fixed costs
39. (non-operating revenues/total operating revenues)- A ratio that reflects how dependent the organization is on non-patient care related net income.
Capital appreciation
Prepaid assets
Non-operating ratio
Cost of capital
40. Debt to be paid off in a period longer than one year.
Long-term debt to net assets ratio
Quick ratio
Long-term financing
Other income
41. Expenses of the organization incurred in non-health-care related activities.
Non-operating expenses
Donor
Interest
Cost of goods sold
42. The unit of service which we wish to know the cost for (hospital admission - classroom hour - course - etc.)
Mail float
Income from investments
For-profit
Final cost object
43. The idea that a dollar today is worth more than a dollar in the future.
Mail float
Performance measure
Time value of money
Non-operating income
44. The planning process that identifies the organization's mission and strategy in order to position itself for the future.
Current ratio
Strategic planning
Cost of goods sold
Liquidity ratios
45. Ratios designed to answer the question: How profitable is the organization?
Profitability ratios
Properties and equipment - net
Long Term Solvency ratios
Asset mix
46. [(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
Profit margin
Budget
Transaction
Debt service coverage
47. 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.
Billing float
Long-term investments
Equity financing
Product diversity
48. Current assets. Net working capital equals current assets –current liabilities.
Working capital
Excess of revenues over expenses
Net Assets to Total Assets
Spillover cash flows
49. The difference between the initial amount paid for an investment and the related future cash inflows after they have been adjusted (discounted) by the cost of capital.
Cash budget
Net present value
Discounted cash flows
Tangible assets
50. Supplementing traditional sources of revenue with new sources.
Accrued expenses
Efficiency
Mutually exclusive projects
Revenue enhancement
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