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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. 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.






2. Proceeds lost by foregoing other opportunities.






3. 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.






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






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






6. 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.






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






8. [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).






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






10. 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






11. The amount of supplies used to provide a service or good.






12. 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.






13. A contract between a lender and a potential borrower preauthorizing the potential borrower's right to borrow up to a specific amount on request as long as they fulfill the terms and conditions of the contract. Also called a letter of credit.






14. 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.






15. The cost of a capital asset (i.e. building or equipment) minus accumulated depreciation.






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






17. (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;






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






19. [Total assets/Net Assets]






20. [(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






21. Assets that have a useful life greater than one year - such as plant - property - and equipment. Plant and equipment are depreciated over time; land (property) is not.






22. 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.






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






24. 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.






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






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






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. The changes in cash resulting from the normal operating activities of the organization.






29. When different products use overhead related services in different proportions - and when the costs of those services are significantly different - The situation present when products consume overhead in different proportions.






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






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






32. [(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






33. Series of payments over time - such as interest paid to bondholders.






34. The system of accounting that recognizes revenues when earned and expenses when resources are used. This method is used by most non-governmental health care organizations. See also Cash basis of accounting.






35. Portion of profit an organization distributes to investors. By law - only investor-owned health care organizations can distribute dividends outside the organization.






36. 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.






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






38. [Inventory/ (Cost of Goods Sold/365)]






39. Financing used expressly for the purchase of non-current assets.






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






41. 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.






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






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






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






45. 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






46. Assets that have a physical presence.






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






48. 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






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






50. Costs that stay the same in total over the relevant range as volume increases - but that change inversely on a per unit basis.