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ACCA Financial Management
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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 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)
Capital financing
Temporarily restricted net assets
Basis of Allocation
Performance budget
2. (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.
Return on total assets
Capital financing
Annuity
Accounts payable
3. A legal obligation to pay the holder of the note or lien.
Depreciation
Expense cost variance
Notes payable
Dividends
4. [(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.
Transaction
Cost of capital
Expense cost variance
Net assets to total assets
5. [(excess of revenues over expenses + interest expense + depreciation expense)/(interest expense + principal payments))- A ratio that measures an organization's ability to pay back a loan. In for-profit organizations - it is calculated as: (net income
Total revenue
Debt service coverage
Restricted donation
Net accounts receivable
6. Assets that provide service for a period exceeding one year. Sometimes referred to as long-term assets.
Fixed costs
Long-term investments
Non-current assets
Expansion decisions
7. An investment that generates an annuity for an indefinite period of time - basically forever.
Interest
Operating margin
Centralization
Perpetuity
8. Organizational unit given the responsibility to carry out one or more tasks and/or achieve one or more outcomes.
Responsibility center
Fixed supplies budget
Line-item budget
Fully allocated costs
9. 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
ABC
Incremental cash flows
Long-term investments
Footnotes
10. Supplementing traditional sources of revenue with new sources.
Capital investment decisions
Non-regular cash flows
Precautionary purposes
Revenue enhancement
11. 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
Present value of an annuity
Profitability ratios
Other expenses
Properties and equipment
12. Bonds that hold the health care provider's real property and equipment as security or collateral in case of default.
Mortgage bonds
Profitability ratios
Precautionary purposes
Fixed asset turnover
13. Ratios designed to answer the question: How profitable is the organization?
Cash basis of accounting
Profitability ratios
Liquidity ratios
Bad debt
14. 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.
Line-item budget
Excess of revenues over expenses
Coupon
Administrative cost centers
15. 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.
Operating revenues
Operating margin
Float
Annuity
16. Looks at the percentage change in a line item's value from one year to the next using the formula: [(subsequent year -base year)/base year) x 100. See also Vertical analysis.
Horizontal analysis
Line of credit
Lease
Revenue rate variance
17. [Net Accounts Receivable/(Revenue/356)]
Average Days Receivable
Net assets released from restriction
Cost
Cash and cash equivalents
18. Previously restricted assets no longer restricted because the terms of the restriction have been met.
Net assets released from restriction
Mail float
Horizontal analysis
Profit margin
19. Debt to be paid off in a period longer than one year.
Fixed asset turnover
Long-term financing
Comparative approach
Cash flows from operating activities
20. A method to evaluate the feasibility of an investment by determining how long it would take until the initial investment is recovered. This method does not account for the time value of money.
Direct costs
Net working capital
Payback
Fixed assets
21. Decisions regarding the acquisition of capital assets. The capital investment decision should be separate from the decision on how to finance capital assets.
Budget
Long-term debt to net assets ratio
Capital investment decisions
Net assets released from restriction
22. The process of distributing service center costs to mission centers - to determine the full cost of each mission center
Cost
Cost avoidance
Co-payments
Allocation
23. A security interest in one or more assets granted to lenders in a secured loan.
Accrual basis of accounting
Other expenses
Excess of revenues over expenses
Lien
24. A contract in which the lessee (user) agrees to pay the leassor (owner) a specific amount over a period of time for the use of an asset.
Indirect costs
Lease
Bonds
Basic accounting equation
25. A borrower's assets on which a lender has legal claim if a borrower defaults on a loan.
Accrual basis of accounting
Collateral
Current liabilities
SWOT analysis
26. Amounts the organization is obligated to pay others - including suppliers and creditors.
Return on total assets
Revenue enhancement
Accounts payable
ROI
27. Irregular cash flows - typically occurring at the end of the life of a project.
Net present value
Not-for-profit
Retained earnings
Non-regular cash flows
28. Literally non-movable assets. Generally used to refer to buildings and equipment.
Fixed assets
Lien
Capital structure decision
Current ratio
29. An entity that is owed money for lending funds or supplying goods or services on credit.
FV
Non-operating expenses
Creditor
Current liabilities
30. The budget that projects the organization's cash inflows and outflows. The bottom line in the cash budget is the amount of cash available at the end of the period.
Activity Based Costing
Long Term Solvency ratios
Cash budget
Profit margin
31. Bonds that have received a rating ranging from AM to BBB (at S&P) - or Aaa to Bbb (Moody's) - of which the highest are called quality ratings.
FV
Investment grade
Strategic planning
Single/Simple Step
32. Revenues generated from an organization's operating activities.
Performance measure
Operating revenues
Donation
Operating cash flows
33. 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.
Revenues
Issuer
Comparative approach
Donation
34. The amount of supplies used to provide a service or good.
Budget variance
Cost of goods sold
Top-down/bottom-up approach
Base Budget
35. The amount of inventory on hand at the end of an accounting period. See also Beginning inventory.
Cost Accounting
Net patient service revenue
Co-payments
Ending inventory
36. 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.
Return on net assets
Clinical cost centers
Non-operating revenues
Discounted cash flows
37. Assets that have a physical presence.
Capital structure ratios
Coupon
Investment centers
Tangible assets
38. The bottom area of the financial statements that contains key information not available in the body of the statements - such as how charity is determined - the composition of investments - which assets are restricted - and the depreciation method.
Cash flows from investing activities
Footnotes
Operating margin
Non-operating ratio
39. Organizational units primarily responsible for providing services and earning a profit based on the health care services provided.
Long Term Solvency ratios
Mission Center
Traditional profit centers
Capital financing
40. Cash flows that occur solely as a result of undertaking a project. Basically the marginal difference between alternatives.
Incremental cash flows
Investment centers
Financing activities
Cost of capital
41. The amount of time between when an organization receives a service and pays for it.
Expenses
Disbursement float
Annuity
Activity ratios
42. Stated interest rate on a bond - as promised by the issuer.
FV
Cost centers
Product diversity
Coupon rate
43. The budget used to forecast operating expenses.
Expense budget
Accumulated depreciation
Restricted donation
Comparative approach
44. 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.
Accountability
Responsibility center
Coupon payment
Operating budget
45. 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.
Net patient service revenue
Capital budget
IRR
Fixed costs
46. 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
Statement of operations
Quick ratio
Expense volume variance
Expenses
47. 1) The degree to which power and authority is concentrated in an organization. 2) The degree to which a variety of services are offered at a single location.
Discount rate
Single/Simple Step
Centralization
Breakeven point
48. The purchase of assets with contributed and internally generated funds. See also Debt financing.
Lease
Equity financing
Retained earnings
Cost centers
49. Future value. What an amount invested today (or a series of payments made over time) will be worth at a given time in the future using the compound interest method. This accounts for the time value of money. See also Present value.
Market rate of interest
Liquidity
FV
Budget variance
50. A form of long-term financing whereby the issuer receives cash and in return issues a note called a bond. By issuing the bond - the issuer agrees to make principal and/or interest payments on specific dates to the holders of the bond.
Bonds
Revenue rate variance
Current ratio
Effectiveness
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