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






2. [(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






3. What a series of equal payments in the future is worth today taking into account the time value of money.






4. Debt to be paid off in a period longer than one year.






5. 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.






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






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






8. 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.






9. 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.






10. The increase in the value of an investment from the time it is purchased until the time it is sold.






11. [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.






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






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






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






15. 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.






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






17. [Total Revenues/ Total Assets]






18. The organization's legal obligations to pay its creditors. Liabilities are classified as current and non-current. Liabilities are one of the three major categories on the balance sheet and are part of the fundamental accounting equation.






19. The ease and speed with which an asset can be turned into cash.






20. 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.






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






22. An entity that owns other companies.






23. 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.






24. The sources of funds to finance the non-current assets of the organization. Also the debt and equity of the organization.






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






26. Amounts given to the organization for operating purposes - such as governmental appropriations and unrestricted donations.






27. [Surplus/Operating Revenues]






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






29. 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.






30. 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.






31. The rise in an economy's general level of prices.






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






33. 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.






34. 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.






35. 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.






36. Operating income not reported elsewhere under revenues - gains - and other support.






37. [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).






38. The idea that a dollar today is worth more than a dollar in the future.






39. 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.






40. 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.






41. Organizational units primarily responsible for ensuring that services are provided to a population in a manner that meets the volume and quality requirements of the organization. Service centers are the most basic type of responsibility centers.






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






43. The budget that forecasts the operating and - in some cases - the non- operating revenues that will be earned during the budget period.






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






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






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






47. 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.






48. Decisions regarding the acquisition of capital assets. The capital investment decision should be separate from the decision on how to finance capital assets.






49. Supplementing traditional sources of revenue with new sources.






50. IA category of non-current assets not intended to be used for operations - but only for capital appreciation and dividends - and that will be held for a period longer than one year.