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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 revenue and expense budgets of an organization.






2. An amount owed to the organization that will not be paid. Charity care is not considered a bad debt since nothing is owed to the organization for services provided.






3. The absence of risk in an investment.






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






5. That point at which total revenues equal total costs. It is described by the equation: (price x volume) = fixed costs + (variable cost per unit x volume).






6. {[cash + marketable securities)/[(operating expenses -depreciation)/ 365].- A ratio that indicates the number of days' worth of expenses an organization can cover with its most liquid assets (cash and marketable securities).






7. 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.






8. 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.






9. Expenses of the organization incurred in non-health-care related activities.






10. The difference between what was planned (budgeted) and what was achieved (actual).






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






12. [(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






13. Return on investment. The percentage gain or loss experienced from an investment.






14. Financing that will be paid back in less than one year.






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






16. One of the four major financial statements of a health care organization. It presents a summary of the organization's assets - liabilities - and net assets as of a certain date.






17. (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






18. Current year budget projected for the coming fiscal year assumes no program changes and adjust for price - workload - annualizations






19. Capital investment decisions designed to increase the operational capability of a health care organization.






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






21. A category of income that includes unrestricted interest - dividends - and gains from the sale of unrestricted investments.






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






23. One of the four major financial statements. It answers the question: Where did our cash come from and where did it go during the accounting period?






24. (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;






25. The cost of activities that take place to produce the final cost object






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






27. A transaction that reduces the risk of an investment.






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






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






30. 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.






31. The purchase of assets with contributed and internally generated funds. See also Debt financing.






32. [Surplus/Operating Revenues]






33. 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






34. Expenses that have been incurred - but not yet paid.






35. Previously restricted assets no longer restricted because the terms of the restriction have been met.






36. Costs not traced to a cost object - but that must eventually be allocated across cost objects. See also Direct costs.






37. 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.






38. 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.






39. The balance sheet category that includes actual money on hand as well as money equivalents - such as savings and checking accounts. It excludes cash restricted as to its use for something other than current operations.






40. A statement intended to guide the organization into the future by identifying the unique attributes of the organization - why it exists - and what it hopes to achieve.






41. [long-term debt/net assets]- A measure of the proportion of an organization's assets that are financed by debt as opposed to equity. In for-profit organizations - it is called the long-term debt to equity ratio and is calculated using the formula [lo






42. An approach to analyzing the financial condition of an organization based on ratios calculated from line items found in the financial statements. There are four major categories of ratios: liquidity - profitability - capitalization - and activity.






43. 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.






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






45. Full-time equivalent employees. Two half-time employees equal one FTE.






46. 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.






47. Bonds that hold the health care provider's real property and equipment as security or collateral in case of default.






48. Organizational units responsible for providing health care related services to clients - patients - or enrollees - and the related costs thereof.






49. A certificate attached to a bond representing the amount of interest to be paid to the holder.






50. Price times total quantity.







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