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ACCA Financial Management
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Instructions:
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. 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
Administrative profit centers
Net Assets
Non-current assets
Efficiency
2. 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.
Accrual basis of accounting
Long Term Solvency ratios
Mission Center
Realization principle
3. 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
Financing activities
Bond rating agency
Fixed labor budget
Amortization of a loan
4. The amount of time between when an organization receives a service and pays for it.
Disbursement float
Hedge
Net accounts receivable
Operating activities
5. Ratios that answer the question: How well is the organization positioned to meet its short-term obligations?
Expense cost variance
Liquidity ratios
Other revenues
Accrued expenses
6. Cash inflows and outflows resulting from financing activities - such as obtaining grants or endowments - or from borrowing or paying back long-term debt.
Issuer
Accounting period
Cash flows from financing activities
Restricted donation
7. Market value. The price at which something - such as bonds and stocks - could be bought or sold today on the open market.
Indirect costs
Incremental cash flows
Opportunity cost
MV
8. 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.
Co-payments
Discounting
Loan amortization schedule
Bond rating agency
9. Properties and equipment less accumulated depreciation.
Spillover cash flows
Properties and equipment - net
Working capital
Controlling activities
10. A security interest in one or more assets granted to lenders in a secured loan.
Cost centers
Line of credit
Lien
Spillover cash flows
11. A category of income that includes unrestricted interest - dividends - and gains from the sale of unrestricted investments.
Fixed Asset Turnover
Capital
Income from investments
Temporarily restricted net assets
12. Organizational unit given the responsibility to carry out one or more tasks and/or achieve one or more outcomes.
Revenue budget
Debt service coverage
Administrative profit centers
Responsibility center
13. The income (operating revenues -operating expenses) earned in non-health-care related activities.
Coupon
Compounding
Non-operating income
Step-down method
14. Demonstrates the extent to which the organization is earning money from its assets. Not usually as imp for NPs - varies w/ NP.
Volume diversity
Bonds
Top-down/bottom-up approach
Asset Management ratios
15. Portion of profit an organization distributes to investors. By law - only investor-owned health care organizations can distribute dividends outside the organization.
Long-term investments
Dividends
Activity ratios
Fixed costs
16. 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.
Cost object
Allowance for uncollectibles
Float
Billing - collections - and disbursement policies and procedures
17. [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?
Cash flows from operating activities
Not-for-profit
Total asset turnover
Cash flows from financing activities
18. Costs that are traced to a cost object. See also Indirect costs and Cost object.
Total revenue
Long-term investments
Controlling activities
Direct costs
19. Financing used expressly for the purchase of non-current assets.
Collections policies and procedures
Assets
Capital financing
Traditional profit centers
20. [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.
ROI
Efficiency
Current ratio
Net working capital
21. [Inventory/ (Cost of Goods Sold/365)]
Average Days Inventory
Realization principle
Debt to equity
SWOT analysis
22. Bonds that hold the health care provider's real property and equipment as security or collateral in case of default.
Cost avoidance
Long-term debt to net assets ratio
Mortgage bonds
Net working capital
23. A situation in which if one project is implemented the other(s) will not be.
Time value of money
Mutually exclusive projects
Opportunity cost
Total asset turnover
24. (non-operating revenues/total operating revenues)- A ratio that reflects how dependent the organization is on non-patient care related net income.
Net working capital
Non-operating ratio
Long-term debt to net assets ratio
Allocation
25. [Net Assets/Total Assets]. This ratio reflects the proportion of total assets financed by equity.
Expense cost variance
Net Assets to Total Assets
Non-operating revenues
Creditor
26. The rate of return required to undertake a project. Also called the hurdle rate or discount rate.
Cash basis of accounting
Ending inventory
Capital
Cost of capital
27. Activities that provide guidance and feedback to keep the organization within its budget - such as staff meetings - regular reports - and bonuses.
Capital budget
Capital investment decisions
Capital financing
Controlling activities
28. 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
Equity financing
Depreciation
Multiyear budget
Times interest earned
29. Capital investment decisions designed to increase the operational capability of a health care organization.
Quick ratio
Expansion decisions
Responsibility center
Lender
30. (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
Budget variance
Strategic planning
Periodic payments
31. Financial and non-financial standards against which organizational performance is measured.
Performance measure
Accounts receivable
Cash budget
Certainty
32. A catchall category for miscellaneous expenses and losses not included in other categories (telephone - travel - meals - etc.).
Other expenses
Liquidity ratios
Accrual basis of accounting
Operating cash flows
33. 1) The resources used to produce a good or service. 2) The amount of cash given up in a transaction. 3) Price. The first definition is based on accrual accounting and the second on cash accounting.
Effectiveness
Statement of cash flows
Cost
Traditional profit centers
34. A technique to evaluate an organization's strengths - weaknesses - opportunities - and threats. Also called a WOTS-up analysis.
Revenue budget
Depreciation
SWOT analysis
Statement of changes in net assets
35. 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.
Step-down method
Other expenses
Other revenues
Equity financing
36. The planning process that identifies the organization's mission and strategy in order to position itself for the future.
Equity financing
Strategic planning
Investor
Expense budget
37. 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.
Other revenues
Net assets to total assets
Discounted cash flows
Cash flows from investing activities
38. Highly liquid current assets such as interest-bearing savings and checking accounts.
Collection float
Leverage
Mission Center
Cash equivalents
39. 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.
Cost object
Cost of goods sold
Basis of Allocation
Statement of changes in net assets
40. The current traded rate for similar risk securities.
Annuity
Cash flows from investing activities
Market rate of interest
Operating expenses
41. A certificate attached to a bond representing the amount of interest to be paid to the holder.
Total revenue
Coupon
Budget
Effectiveness
42. General and administrative expenses. Operating expenses that are not contained in the labor or supplies budgets.
Capital
Other revenues
G & A expenses
Operating revenues
43. The costs of a service after taking into account its direct and fair share of allocated costs.
Income from investments
Leverage
Fully allocated costs
Capital investment decisions
44. The system of accounting that recognizes revenues when cash is received and expenses when cash is paid out. See also Accrual basis of accounting.
Notes payable
Net patient service revenue
FV
Cash basis of accounting
45. The amount of inventory on hand at the end of an accounting period. See also Beginning inventory.
Parent organization
Ending inventory
Revenue rate variance
Line-item budget
46. 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).
Deferred revenues
Operating cash flows
Non-operating revenues
Other expenses
47. A security whose interest rate does not change during the lifetime of the bond.
Fixed (interest) rate debt
Performance budget
Current liabilities
Net patient service revenue
48. [(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
FV
Fixed Asset Turnover
Cash flows from financing activities
49. Capital investment decisions designed to increase an organization's strategic position.
Strategic decisions
Hedge
Disbursement float
Profit margin
50. Responsibility centers responsible for making a certain return on investments.
Parent organization
Investment centers
Efficiency
Non-operating revenues
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