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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. One of the four major financial statements. It explains the changes in net assets from one period to the next on the balance sheet. Also called statement of changes in owners' equity in a for-profit business.






2. Revenues of the organization earned in non-healthcare related activities.






3. An entity that owns other companies.






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






5. The cost of the supplies on hand at the beginning of the year.






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






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






8. Debt to be paid off in a period longer than one year.






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






10. 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






11. A budget in which line items are presented by program.






12. (excess of revenues over expenses/total assets)- A measure of how much profit is earned for each dollar invested in assets. In for-profit organizations it is called return on assets and is calculated as: net income/assets.






13. 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.






14. The expenses incurred from an organization's operating activities.






15. The difference between what was planned (budgeted) and what was achieved (actual).






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






17. [Net Assets/Total Assets]. This ratio reflects the proportion of total assets financed by equity.






18. A security whose interest rate does not change during the lifetime of the bond.






19. The section of the expense budget that forecasts salary and benefits.






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. The cost of a capital asset (i.e. building or equipment) minus accumulated depreciation.






22. Revenues generated from an organization's operating activities.






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






24. Time delays in the billing and collection process. There are four categories of float: billing - collection - transit - and disbursement. An organization's goal is to optimize float for incoming revenues and outgoing bills.






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






26. Capital investment decisions designed to increase an organization's strategic position.






27. [Total Liabilities/ Net assets]






28. The process of distributing service center costs to mission centers - to determine the full cost of each mission center






29. The rise in an economy's general level of prices.






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






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






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






33. (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;






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






36. A certificate attached to a bond representing the amount of interest to be paid to the holder.






37. Ratios that answer the question: How well is the organization positioned to meet its short-term obligations?






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






39. 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.






40. Supplementing traditional sources of revenue with new sources.






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






42. Budgets that typically cover two to five years.






43. Future value. What an amount invested today (or a series of payments made over time) will be worth at a given time in the future using the compound interest method. This accounts for the time value of money. See also Present value.






44. 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.






45. The amount of inventory on hand at the beginning of an accounting period. See also Ending inventory.






46. 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?






47. 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.






48. The absence of risk in an investment.






49. The section of the statement of cash flows that reports the total change in cash and cash equivalents over the accounting period.






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.