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






2. Organizational unit given the responsibility to carry out one or more tasks and/or achieve one or more outcomes.






3. A good or service provided in return for some type of compensation.






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






5. 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.






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






7. Setting aside cash to meet unexpected demands - such as unexpected maintenance of a facility or piece of equipment.






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






9. An entity that owns other companies.






10. 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.






11. The total amount of multiyear debt due in future years.






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






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






14. (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;






15. A method to evaluate the feasibility of an investment by determining how long it would take until the initial investment is recovered. This method does not account for the time value of money.






16. 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.






17. [Total Liabilities/ Net assets]






18. 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






19. A section of the statement of cash flows used to report such activities as borrowing and paying back loans.






20. The elapsed time between financial statements. Common accounting periods






21. 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.






22. 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






23. A statistic used to allocate costs from a cost center based on a cause and effect relationship. For example - a common allocation base to allocate the costs of maintaining medical records is number of visits. See also Cost driver.






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






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






26. 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






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






28. The resources owned by the organization. It is one of the three major categories on the balance sheet.






29. An entity that temporarily grants the use of money or an asset to another in return for compensation - usually in the form of interest.






30. Costs (such as rent - administration - insurance - etc. that are shared by a number of services or departments and cannot easily be broken down to the services attributable to each (surgery - emergency medicine - etc.). Also called joint costs.






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






32. Portion of the profits the organization keeps in-house to use in support of its mission.






33. When products are manufactured in batches in different sizes - and overhead activities are affected by the size of the batch being produced






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






35. Proceeds lost by foregoing other opportunities.






36. The increase in the value of an investment from the time it is purchased until the time it is sold.






37. Highly liquid current assets such as interest-bearing savings and checking accounts.






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






39. Literally non-movable assets. Generally used to refer to buildings and equipment.






40. An entity that is owed money for lending funds or supplying goods or services on credit.






41. A legal obligation to pay the holder of the note or lien.






42. Service center costs are allocated to both mission centers and other service centers






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






44. 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






45. 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.






46. [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).






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






48. Opposite of the authoritarian approach. The roles and responsibilities of the budgeting process are diffused throughout the organization. Often called the participatory approach.






49. 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.






50. 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.