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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. Activities that provide guidance and feedback to keep the organization within its budget - such as staff meetings - regular reports - and bonuses.






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






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






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






5. The difference between current assets and current liabilities.






6. Literally non-movable assets. Generally used to refer to buildings and equipment.






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






8. 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






9. 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






10. IA category of non-current assets not intended to be used for operations - but only for capital appreciation and dividends - and that will be held for a period longer than one year.






11. Bonds that have received a rating ranging from AM to BBB (at S&P) - or Aaa to Bbb (Moody's) - of which the highest are called quality ratings.






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






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






14. An entity that sells bonds in order to raise money.






15. [(cash + marketable securities)/current liabilities). A liquidity ratio that measures how much cash and marketable securities are available to payoff all current liabilities.






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






17. [net assets/total assets)- This ratio reflects the proportion of total assets financed by equity. In for-profit organizations it is called the equity to total asset ratio and is calculated using the formula [owners' equity/total assets).






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






19. 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.






20. 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






21. 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.






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






23. Organizational units responsible for providing administrative support at a profit to other organizational units or to the organization as a whole and/or raising funds externally.






24. The difference between the initial amount paid for an investment and the related future cash inflows after they have been adjusted (discounted) by the cost of capital.






25. 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.






26. Current assets. Net working capital equals current assets –current liabilities.






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






28. Highly liquid current assets such as interest-bearing savings and checking accounts.






29. Organizational units primarily responsible for ensuring that services are provided to a population in a manner that meets the volume and quality requirements of the organization. Service centers are the most basic type of responsibility centers.






30. Supplementing traditional sources of revenue with new sources.






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






32. (non-operating revenues/total operating revenues)- A ratio that reflects how dependent the organization is on non-patient care related net income.






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






34. The process of adjusting for the time value of money backward in time to present value. See also Compounding.






35. Assets that provide service for a period exceeding one year. Sometimes referred to as long-term assets.






36. Properties and equipment less accumulated depreciation.






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






38. Demonstrates the extent to which the organization is earning money from its assets. Not usually as imp for NPs - varies w/ NP.






39. Demonstrates the ability to pay off long term debt






40. The cumulative amount of depreciation recognized on an asset since its purchase. An asset's book value is equal to its purchase price less the amount of accumulated depreciation.






41. The budget that projects the organization's cash inflows and outflows. The bottom line in the cash budget is the amount of cash available at the end of the period.






42. [(cash + marketable securities + net accounts receivable)/current liabilities)- A measure of the organization's liquidity.






43. 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






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






45. The amount remaining after subtracting variable costs from revenues. When the organization is not at capacity - it is the "profit" the organization makes on providing each new unit that is available to cover all other costs. Contribution margin may b






46. How an organization chooses to finance its working capital needs.






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






48. Generally - assets that will be used or consumed within one year. Some organizations use a period of less than one year.






49. A statistic used to allocate costs from a cost center based on a cause and effect relationship. For example - a common allocation base to allocate the costs of maintaining medical records is number of visits. See also Cost driver.






50. The central document of the planning/control cycle. It identifies revenues and resources that will be needed by an organization to achieve its goals and objectives.