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ACCA Financial Management

  • 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. 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.

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

3. 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

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

5. [total revenues/net plant & equipment]- This ratio measures the number of dollars generated for each dollar invested in an organization's plant and equipment.

6. (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

7. Requiring the patient to pay part of his/her health care bill. These payments are used to prevent over-utilization of services.

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

9. Stated interest rate on a bond - as promised by the issuer.

10. A budget in which line items are presented by program.

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

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

13. 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).

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

15. Recording expenses associated with making revenue at the same time as revenues are recognized

16. A legal obligation to pay the holder of the note or lien.

17. The cost of the supplies on hand at the beginning of the year.

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

19. 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

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

21. Demonstrates the ability to pay off long term debt

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

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

24. A catchall category for miscellaneous expenses and losses not included in other categories (telephone - travel - meals - etc.).

25. 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

26. An entity that owns other companies.

27. The bottom line in the statement of operations. It includes such items as operating and non-operating income - contributions of long-lived assets - transfers to parent - and extraordinary items.

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

29. Organizational units responsible for their own costs that provide administrative support to other organizational units or the organization

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

31. Budgets that typically cover two to five years.

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

33. 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

34. The section of the statement of cash flows that reports the total change in cash and cash equivalents over the accounting period.

35. Irregular cash flows - typically occurring at the end of the life of a project.

36. The costs of a service after taking into account its direct and fair share of allocated costs.

37. The activities of an organization directly related to its main line of business.

38. The ability of an organization to find new ways to operate that obviate the need for certain classes of costs - such as doing procedures on an outpatient rather than inpatient basis.

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

40. 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.

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

42. Revenues of the organization earned in non-healthcare related activities.

43. 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.

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

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

46. [(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.

47. A note payable that has as collateral real assets and that requires periodic payments.

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

49. I) The cost to borrow money. It can be expressed in dollars or as a percentage. 2) Payment to creditors for the use of money on credit.

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