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ACCA Financial Management

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  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. The organization's legal obligations to pay its creditors. Liabilities are classified as current and non-current. Liabilities are one of the three major categories on the balance sheet and are part of the fundamental accounting equation.






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






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






4. [Total assets/Net Assets]






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






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






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






8. The current traded rate for similar risk securities.






9. Operating income not reported elsewhere under revenues - gains - and other support.






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






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






12. 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.






13. 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)






14. I) Measuring inputs against outputs. 2) The cost of service per unit rendered.






15. The absence of risk in an investment.






16. 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.






17. [Total Revenues/ Total Assets]






18. process of measuring the resources (costs) used to produce results.






19. An entity that owns other companies.






20. Responsibility centers responsible for making a certain return on investments.






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






22. The amount of time between when an organization receives a service and pays for it.






23. 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.






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






25. Amounts earned by the organization from the provision of service or sale of goods.






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






27. Irregular cash flows - typically occurring at the end of the life of a project.






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






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






30. If a project is undertaken - these cash flows are the indirect increases or decreases in cash flows that will occur elsewhere in the organization.






31. Financing that will be paid back in less than one year.






32. 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.






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






34. Ratios that measure how efficiently an organization is using its assets to produce revenues.






35. Organizational units responsible for their own costs that provide administrative support to other organizational units or the organization






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






37. A measure of the resources used to generate revenue and/or provide a service. Often used synonymously with costs. See also Costs.






38. 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.






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






40. Assets that have a physical presence.






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






42. 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






43. A note payable that has as collateral real assets and that requires periodic payments.






44. Supplementing traditional sources of revenue with new sources.






45. A technique to evaluate an organization's strengths - weaknesses - opportunities - and threats. Also called a WOTS-up analysis.






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






47. 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?






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






49. General and administrative expenses. Operating expenses that are not contained in the labor or supplies budgets.






50. 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.







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