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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. Amounts the organization is obligated to pay others - including suppliers and creditors.






2. Capital investment decisions designed to increase the operational capability of a health care organization.






3. Donated assets that have restrictions on their use which will never be removed.






4. 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.






5. A method of allocating costs that are not directly paid for (utilities - rent - administration) into those products or services to which payment is attached (day of care - a brief visit). See also Activity-based costing.






6. Supplementing traditional sources of revenue with new sources.






7. 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.






8. The balance sheet category that includes actual money on hand as well as money equivalents - such as savings and checking accounts. It excludes cash restricted as to its use for something other than current operations.






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






10. 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.






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






12. 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.






13. 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.






14. Costs that are traced to a cost object. See also Indirect costs and Cost object.






15. The revenue that the organization has a right to collect. It is computed as: gross patient service revenues – contractual allowance and charity care.






16. Activities that provide guidance and feedback to keep the organization within its budget - such as staff meetings - regular reports - and bonuses.






17. [Total Liabilities/ Net assets]






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






19. [(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






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






21. 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






22. The cash flows derived from an organization's operating activities.






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






24. A good or service provided in return for some type of compensation.






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






26. 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)






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






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






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






30. {[cash + marketable securities)/[(operating expenses -depreciation)/ 365].- A ratio that indicates the number of days' worth of expenses an organization can cover with its most liquid assets (cash and marketable securities).






31. Each service center






32. A donation that has conditions which must be satisfied. See also Temporarily restricted net assets.






33. Generally - assets that will be used or consumed within one year. Some organizations use a period of less than one year.






34. Costs not traced to a cost object - but that must eventually be allocated across cost objects. See also Direct costs.






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






36. Traces indirect costs to activity that uses them. Overhead collected in pools and distributed to cost object by cost drivers.






37. The cost of the supplies on hand at the beginning of the year.






38. 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.






39. Demonstrates the extent to which the organization is earning money from its assets. Not usually as imp for NPs - varies w/ NP.






40. [Total Revenues/ Total Assets]






41. [(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






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






43. process of measuring the resources (costs) used to produce results.






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






45. 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.






46. A catchall category for miscellaneous expenses and losses not included in other categories (telephone - travel - meals - etc.).






47. 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.






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






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






50. Requiring the patient to pay part of his/her health care bill. These payments are used to prevent over-utilization of services.