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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. Ratios designed to answer the question: How profitable is the organization?






2. The system of accounting that recognizes revenues when cash is received and expenses when cash is paid out. See also Accrual basis of accounting.






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






4. 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






5. [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






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






7. [(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






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






9. The resources owned by the organization. It is one of the three major categories on the balance sheet.






10. The process of distributing service center costs to mission centers - to determine the full cost of each mission center






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






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






13. 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.






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






15. An entity that owns other companies.






16. Private entity or individual who makes a donation






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






18. Organizational units responsible for providing administrative support at a profit to other organizational units or to the organization as a whole and/or raising funds externally.






19. 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






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






21. 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.






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






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






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






25. 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.






26. A measure of the income earned from operating activities. It is calculated as: unrestricted revenues - gains - and other support -expenses and losses.






27. {current liabilities/[(total expenses






28. (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






29. A situation in which if one project is implemented the other(s) will not be.






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






31. Ratios that measure how the organization's assets are financed and/or whether the organization can take on new debt.






32. The expenses incurred from an organization's operating activities.






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






34. 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.






35. The current traded rate for similar risk securities.






36. Gross proceeds less the underwriter's fee and other issuance fees.






37. 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.






38. 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.






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






40. Financial obligations that will be paid off over a time period longer than one year






41. 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.






42. 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.






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






44. General and administrative expenses. Operating expenses that are not contained in the labor or supplies budgets.






45. [Total assets/Net Assets]






46. Assets that have restrictions on their use which will be removed either with the passage of time or the occurrence of some event.






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






48. Opposite of the authoritarian approach. The roles and responsibilities of the budgeting process are diffused throughout the organization. Often called the participatory approach.






49. 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.






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