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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.
  • 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. The budget format that lists revenues and expenses by category - such as labor - travel - and supplies. Categories are sometimes broken down into sub-categories. See also Performance budget and Program budget.






2. (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;






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






4. An assignment or grading of the likelihood that an organization will not default on a bond.






5. The method of capital budgeting that compares the cash flows resulting from continuing with the existing alternative to those that would result if the equipment were replaced.






6. 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.






7. The system of accounting that recognizes revenues when cash is received and expenses when cash is paid out. See also Accrual basis of accounting.






8. Traces indirect costs to activity that uses them. Overhead collected in pools and distributed to cost object by cost drivers.






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






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






11. Non-operating income.






12. The method by which to distribute service center costs to mission centers; in general the one that most accurately measures use by the cost centers that receives its services (food service - # of meals - hospital laundry - # of pounds processed)






13. 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






14. Portion of the profits the organization keeps in-house to use in support of its mission.






15. 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.






16. Being subject to sanctions with respect to carrying out responsibilities.






17. 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






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






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






20. 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.






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






22. [Total Revenues/ Total Assets]






23. Any product - service - customer - contract - project - process or other work unit for which a separate cost measurement is desired.






24. [Surplus/Operating Revenues]






25. [Total Revenues/(Net Fixed Assets)]. This ratio measures the number of dollars generated for each dollar invested in an organization's fixed assets (i.e. plant and equipment).






26. The section of the expense budget that forecasts the cost of those supplies that will not vary as a direct result of changes in the amount of services provided (such as administrative office supplies).






27. Organizational units primarily responsible for providing services and earning a profit based on the health care services provided.






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






29. A measure of the income earned from operating activities. It is calculated as: unrestricted revenues - gains - and other support -expenses and losses.






30. 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.






31. [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?






32. A series of equal cash flows made or received at regular time intervals. Ordinary annuities occur at the end of each period whereas annuities due occur at the beginning of each period.






33. [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.






34. The total amount of multiyear debt due in future years.






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






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






37. An organization whose profits can be distributed outside the organization and must pay taxes. Also called investor-owned organizations.






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. 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.






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






41. Revenue is recorded when goods or services are delivered






42. Financial and non-financial standards against which organizational performance is measured.






43. 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.






44. 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.






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






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






47. [Net Assets/Total Assets]. This ratio reflects the proportion of total assets financed by equity.






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






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






50. 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