Test your basic knowledge |

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. Properties and equipment less accumulated depreciation.






2. 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.






3. 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.






4. [operating income/total operating revenues]- The proportion of profit remaining after subtracting total operating expenses from operating revenues.






5. The amount of the total revenue variance that occurs because the actual average rate charged varies from that originally budgeted. It can be calculated using the formula: (actual rate -budgeted rate) x actual volume.






6. Proceeds lost by foregoing other opportunities.






7. Assets minus Liabilities. One of the three major categories on the balance sheet. Traditionally known as stockholders' equity in investor-owned organizations and fund balance in not-for-profit organizations. In not-for-profit health care organization






8. The idea that a dollar today is worth more than a dollar in the future.






9. Gross proceeds less the underwriter's fee and other issuance fees.






10. [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






11. Amounts given to the organization for operating purposes - such as governmental appropriations and unrestricted donations.






12. Assets = Liabilities + Net Assets (aka Equity).






13. [Total Liabilities/ Net assets]






14. 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.






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






16. The current traded rate for similar risk securities.






17. One of the four major financial statements. It summarizes the organization's revenues and expenses during an accounting period as well as other items that affect its unrestricted net assets. It is analogous to - but different from - an income stateme






18. A statement intended to guide the organization into the future by identifying the unique attributes of the organization - why it exists - and what it hopes to achieve.






19. Cash flows that have been adjusted to their present value to account for the cost of capital (over time) and the time value of money.






20. Each service center






21. 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.






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






23. The planning process that identifies the organization's mission and strategy in order to position itself for the future.






24. 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.






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






26. 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






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






28. [(actual cost per unit -budgeted cost per unit) x actual volume).- The difference between the variable expenses that would have been expected at the actual volume and those actually incurred.






29. Operating income plus other income. This is analogous to net income before taxes in for-profit entities.






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






31. 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






32. The delay between providing the service and getting the bill to the patient or third party. There are two aspects of billing float: assembling the bill and delivering the bill to the patient or third-party payor.






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






34. A method by which the organization develops its strategies and budgets to meet future financial targets.






35. 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).






36. Internal rate of return. The percentage return on an investment. It is the rate of return at which the net present value equals zero. Often used as a comparison to cost of capital.






37. Expenses of the organization incurred in non-health-care related activities.






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






39. A method of allocating costs that are not directly paid for (utilities - rent - administration) into those products or services to which payment is attached (day of care - a brief visit). See also Activity-based costing.






40. 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






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






42. Demonstrates the ability to pay off long term debt






43. Revenue is recorded when goods or services are delivered






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






45. The income (operating revenues -operating expenses) earned in non-health-care related activities.






46. (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






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






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






49. The gradual process of paying off debt through a long series of equal periodic payments. Each payment covers a portion of the principal plus current interest. The periodic payments are equal over the lifetime of the loan - but the proportion going to






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