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Test your basic knowledge |
ACCA Financial Management
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Subjects
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certifications
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business-skills
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acca
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. 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.
Bonds
Single/Simple Step
MV
Discount rate
2. The total amount of multiyear debt due in future years.
Amortization of a loan
Current liabilities
Realization principle
Long-term debt - net of current portion
3. 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.
Bad debt
Fixed labor budget
Current ratio
Depreciation
4. The revenue and expense budgets of an organization.
Liquidity
IRR
Operating budget
Certainty
5. Operating income not reported elsewhere under revenues - gains - and other support.
Parent organization
Expense volume variance
Other revenues
Budget
6. Organizational units responsible for their own costs that provide administrative support to other organizational units or the organization
Book value
Operating revenues
Market rate of interest
Administrative cost centers
7. A measure of the resources used to generate revenue and/or provide a service. Often used synonymously with costs. See also Costs.
Expenses
Net Assets to Total Assets
Amortization of a loan
Final cost object
8. A security interest in one or more assets granted to lenders in a secured loan.
Operating activities
Cost centers
Revenue budget
Lien
9. Expenses that have been incurred - but not yet paid.
Non-operating ratio
Activity ratios
Accrued expenses
Current assets
10. [Total assets/Net Assets]
Disbursement float
Leverage
Properties and equipment - net
Annuity
11. I) Measuring inputs against outputs. 2) The cost of service per unit rendered.
Step-down method
Statement of cash flows
Opening inventory
Efficiency
12. [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.
Cash basis of accounting
HMO
Mortgage
Current ratio
13. 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.
Dividends
Lease
Net increase (decrease) in cash and cash equivalents
Mutually exclusive projects
14. 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.
Bad debt
Top-down budgeting
Cost
Balance sheet
15. Cash inflows and outflows resulting from financing activities - such as obtaining grants or endowments - or from borrowing or paying back long-term debt.
Opportunity cost
Billing - collections - and disbursement policies and procedures
Cash basis of accounting
Cash flows from financing activities
16. Capital investment decisions designed to increase an organization's strategic position.
Investor
Efficiency
Strategic decisions
Accrued expenses
17. An investment that generates an annuity for an indefinite period of time - basically forever.
Dividends
Fixed supplies budget
Activity Based Costing
Perpetuity
18. [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
Long-term debt to net assets ratio
Prepaid assets
Billing float
Line-item budget
19. 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
Non-operating ratio
Depreciation
Short-term financing
Deferred revenues
20. [Total Revenues/ Total Assets]
Accountability
Creditor
Asset Turnover Ratio
Basis of Allocation
21. Directly related to the purposes of the organization and the delivery of services
Lease
Mission Center
Fixed (interest) rate debt
Strategic planning
22. Gross proceeds less the underwriter's fee and other issuance fees.
FV
Net proceeds from a bond issuance
Cost avoidance
Lien
23. [Inventory/ (Cost of Goods Sold/365)]
Average Days Inventory
Net accounts receivable
Operating budget
Fixed (interest) rate debt
24. Price times total quantity.
Single/Simple Step
Discounted cash flows
Revenue budget
Total revenue
25. [(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
Debt service coverage
Net proceeds from a bond issuance
Cash and cash equivalents
Mission statement
26. Recording expenses associated with making revenue at the same time as revenues are recognized
Fixed (interest) rate debt
Other support
Matching principle
Working capital
27. A schedule detailing the principal and interest payments required to repay a loan. Typically - the periodic payments remain unchanged - but the proportion used to payoff the principal increases over time.
Operating expenses
Incremental cash flows
Not-for-profit
Loan amortization schedule
28. What a series of equal payments in the future is worth today taking into account the time value of money.
Capital
Mail float
Present value of an annuity
Statement of cash flows
29. Non-operating income.
Other income
Capital financing
Net assets released from restriction
Market rate of interest
30. Budgets that typically cover two to five years.
Operating revenues
Income from investments
Multiyear budget
Amortization of a loan
31. Assets that have a physical presence.
Book value
Amortization of a loan
Tangible assets
Matching principle
32. A measure of the income earned from operating activities. It is calculated as: unrestricted revenues - gains - and other support -expenses and losses.
Allocation
Product diversity
Operating income
Acid test ratio
33. The amount of time between when an organization receives a service and pays for it.
Non-operating ratio
Long-term debt to net assets ratio
Disbursement float
Horizontal analysis
34. 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
Non-current liabilities
Non-operating income
Long-term debt - net of current portion
HMO
35. The ease and speed with which an asset can be turned into cash.
Accounts payable
Liquidity
Expense volume variance
Certainty
36. Revenue is recorded when goods or services are delivered
Realization principle
Transaction
Periodic payments
Lien
37. 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.
Accrued expenses
Current liabilities
Average Days Receivable
Ratio analysis
38. That point at which total revenues equal total costs. It is described by the equation: (price x volume) = fixed costs + (variable cost per unit x volume).
Breakeven point
Current liabilities
Net proceeds from a bond issuance
Cash equivalents
39. A borrower's assets on which a lender has legal claim if a borrower defaults on a loan.
Beginning inventory
Collateral
Capital financing
Disbursement float
40. The section of the statement of cash flows that reports the total change in cash and cash equivalents over the accounting period.
Fixed (interest) rate debt
Operating income
Net increase (decrease) in cash and cash equivalents
Allocation base
41. 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).
Operating activities
Deferred revenues
Parent organization
Allocation base
42. I) Calculating interest using the compound interest method. 2) Adjusting for the time value of money forward in time to a future value. See also Compound interest method and Discounting.
Accounts receivable
Compounding
Traditional profit centers
Liquidity
43. Assets that have a useful life greater than one year - such as plant - property - and equipment. Plant and equipment are depreciated over time; land (property) is not.
Fixed Asset Turnover
Capital assets
Current assets
Allocation base
44. (tax exempt revenue bonds)- Bonds in which the interest payments to the investor are exempt from the IRS. These bonds must be issued by an organization that has received tax exemption from the IRS and be used to fund projects that qualify as "exempt
Tax-exempt bonds
Payback
Annuity
Performance budget
45. Assets = Liabilities + Net Assets (aka Equity).
Mutually exclusive projects
Cost of capital
Basic accounting equation
Accounts receivable
46. The time between the issuance of the bill and the time funds are available for use by the health care organization. It has two components: mail float and processing float.
Collection float
Asset mix
Net assets to total assets
Long-term investments
47. Expenses of the organization incurred in non-health-care related activities.
Clinical cost centers
Issuer
Non-operating expenses
ABC
48. The increase in the value of an investment from the time it is purchased until the time it is sold.
Capital appreciation
Cash and cash equivalents
ROI
Float
49. 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.
Float
Donation
Prepaid assets
Opening inventory
50. Ratios that answer the question: How well is the organization positioned to meet its short-term obligations?
Liquidity ratios
Coupon payment
Net working capital
Beginning inventory