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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. I) The cost to borrow money. It can be expressed in dollars or as a percentage. 2) Payment to creditors for the use of money on credit.






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






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






4. Decisions regarding the acquisition of capital assets. The capital investment decision should be separate from the decision on how to finance capital assets.






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






6. Each service center






7. 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






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






9. 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.






10. [(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






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






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






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






14. The absence of risk in an investment.






15. [total revenues/net plant & equipment]- This ratio measures the number of dollars generated for each dollar invested in an organization's plant and equipment.






16. The amount of inventory on hand at the end of an accounting period. See also Beginning inventory.






17. 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.






18. 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.






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






20. 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.






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






22. Organizational units responsible for providing services and controlling their costs. There are two major types: clinical cost centers and administrative cost centers.






23. Any product - service - customer - contract - project - process or other work unit for which a separate cost measurement is desired.






24. Organizational units responsible for providing administrative support at a profit to other organizational units or to the organization as a whole and/or raising funds externally.






25. Cash flows that occur solely as a result of undertaking a project. Basically the marginal difference between alternatives.






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






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






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






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






30. The revenue and expense budgets of an organization.






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






32. Amounts due to the organization from patients - third parties - and others.






33. A category of income that includes unrestricted interest - dividends - and gains from the sale of unrestricted investments.






34. [total revenues/total assets].- This ratio measures the overall efficiency of the organization's assets to produce revenue. It answers the question: For every dollar in assets - how many dollars of revenue are being generated?






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






36. Demonstrates the ability to pay off long term debt






37. Stated interest rate on a bond - as promised by the issuer.






38. Financing used expressly for the purchase of non-current assets.






39. 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)






40. {current liabilities/[(total expenses






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






42. Assets that have restrictions on their use which will be removed either with the passage of time or the occurrence of some event.






43. [Total assets/Net Assets]






44. The revenue that the organization has a right to collect. It is computed as: gross patient service revenues – contractual allowance and charity care.






45. The cash flows derived from an organization's operating activities.






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






47. Activities that provide guidance and feedback to keep the organization within its budget - such as staff meetings - regular reports - and bonuses.






48. Bonds that hold the health care provider's real property and equipment as security or collateral in case of default.






49. 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.






50. 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).