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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 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.






2. 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.






3. Funds provided by a private entity or individual without the requirement of repayment. Donations can either be restricted or unrestricted.






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






5. 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.






6. Being subject to sanctions with respect to carrying out responsibilities.






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






8. 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.






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






10. 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.






11. A statistic used to allocate costs from a cost center based on a cause and effect relationship. For example - a common allocation base to allocate the costs of maintaining medical records is number of visits. See also Cost driver.






12. 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.






13. (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;






14. A budget which presents not only line items and programs but also the performance goals that each program can be expected to attain. See also Line item budget and Program budget.






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






16. 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.






17. A budget in which line items are presented by program.






18. Market value. The price at which something - such as bonds and stocks - could be bought or sold today on the open market.






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






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






21. A benefit paid for in advance (rent - insurance - etc.). Also called prepaid expense.






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






23. 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






24. When products are manufactured in batches in different sizes - and overhead activities are affected by the size of the batch being produced






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






26. [Net Assets/Total Assets]. This ratio reflects the proportion of total assets financed by equity.






27. Budgets that typically cover two to five years.






28. 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.






29. An entity that owns other companies.






30. (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






31. Health maintenance organization. Entities that receive premium payments from enrollees with the understanding that the HMO will be financially responsible for all predefined health care required by its enrollees for a specified period of time. The he






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






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






34. Monies received that have not yet been earned. One of the most common deferred revenues is the receipt of capitation on the basis of per member per month (PMPM).






35. An investment that generates an annuity for an indefinite period of time - basically forever.






36. 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.






37. If a project is undertaken - these cash flows are the indirect increases or decreases in cash flows that will occur elsewhere in the organization.






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






39. Supplementing traditional sources of revenue with new sources.






40. [Total Revenues/ Total Assets]






41. Recording expenses associated with making revenue at the same time as revenues are recognized






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






43. The amount expected to be collected from payors. It is calculated as: gross accounts receivable – discounts and allowances – allowance for un-collectibles.






44. An entity that is owed money for lending funds or supplying goods or services on credit.






45. Revenues generated from an organization's operating activities.






46. The activities of an organization directly related to its main line of business.






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






48. 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.






49. Policies and procedures that address when and how to collect revenues - such as paying at time of service - sending accounts to collection agencies - and writing off accounts as bad debt.






50. Amounts due to the organization from patients - third parties - and others.