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ACCA Financial Management

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. An entity that gives capital to another entity in expectation of a financial or non-financial return.






2. 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.






3. [(actual volume -budgeted volume) x budgeted cost per unit).- The portion of total variance that is due to actual volume being either higher or lower than budgeted volume. It is the difference between the expenses forecast in the original budget and






4. Financial obligations that will be paid off over a time period longer than one year






5. A security interest in one or more assets granted to lenders in a secured loan.






6. 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






7. 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.






8. The degree of dispersion of responsibility within an organization. See also Centralization.






9. 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.






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






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






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






13. 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.






14. A balance sheet account that estimates the total amount of customer accounts receivable that will not be collected. It is also called allowance for bad debts and allowance for doubtful accounts.






15. The budget used to forecast - and in some cases justify - the expenditures (and in some cases the sources of financing) for non-current assets.






16. A situation in which if one project is implemented the other(s) will not be.






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






18. 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






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






20. [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).






21. (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.






22. The elapsed time between financial statements. Common accounting periods






23. The amount of inventory on hand at the end of an accounting period. See also Beginning inventory.






24. Policies and procedures that address when and how to collect revenues - such as paying at time of service - sending accounts to collection agencies - and writing off accounts as bad debt.






25. 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.






26. Cash inflows and outflows resulting from financing activities - such as obtaining grants or endowments - or from borrowing or paying back long-term debt.






27. Cash inflows and outflows for the organization resulting from investing activities such as purchasing and selling investments or investing in itself by purchasing or selling non-current assets. It also includes transfers to and from the parent corpor






28. [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?






29. Market value. The price at which something - such as bonds and stocks - could be bought or sold today on the open market.






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






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






32. 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.






33. 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






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






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






36. The percentage of each asset relative to total assets.






37. Amounts the organization is obligated to pay others - including suppliers and creditors.






38. [(excess of revenues over expenses + interest expense)/interest expense].- This ratio enables creditors and lenders to evaluate an organization's ability to generate earnings necessary to meet interest expense requirements. In for-profit organization






39. Decisions regarding the acquisition of capital assets. The capital investment decision should be separate from the decision on how to finance capital assets.






40. A donation that has conditions which must be satisfied. See also Temporarily restricted net assets.






41. A measure of the resources used to generate revenue and/or provide a service. Often used synonymously with costs. See also Costs.






42. The elapsed time between when the patient or third-party payor sends the payment and the time the health care provider receives the payment.






43. Responsibility centers responsible for making a certain return on investments.






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






45. The resources owned by the organization. It is one of the three major categories on the balance sheet.






46. (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;






47. The amount the holder of the coupon receives periodically - usually semiannually. Over the year - it equals the coupon rate times the face value of the bond.






48. Service center costs are allocated to both mission centers and other service centers






49. Ratios designed to answer the question: How profitable is the organization?






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