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ACCA Financial Management
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Subjects
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certifications
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business-skills
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acca
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
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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. A benefit paid for in advance (rent - insurance - etc.). Also called prepaid expense.
Prepaid assets
Net working capital
Mission statement
Capital structure ratios
2. Organizational unit given the responsibility to carry out one or more tasks and/or achieve one or more outcomes.
Spillover cash flows
Performance budget
Other expenses
Responsibility center
3. A good or service provided in return for some type of compensation.
Transaction
Comparative approach
Liquidity
Float
4. Costs not traced to a cost object - but that must eventually be allocated across cost objects. See also Direct costs.
Beginning inventory
Net increase (decrease) in cash and cash equivalents
Indirect costs
Direct costs
5. Tools used to increase the amount of cash available to the organization. The objective of billing - credit - and collection policies is to accelerate cash receipts; the objective of cash disbursement policies is to slow down cash outflows.
Increase in unrestricted net assets
Quick ratio
SWOT analysis
Billing - collections - and disbursement policies and procedures
6. Funds provided by a private entity or individual without the requirement of repayment. Donations can either be restricted or unrestricted.
FV
Hedge
Expense cost variance
Donation
7. Setting aside cash to meet unexpected demands - such as unexpected maintenance of a facility or piece of equipment.
Precautionary purposes
Operating revenues
Non-operating revenues
G & A expenses
8. The process of adjusting for the time value of money backward in time to present value. See also Compounding.
Breakeven point
Discounting
Administrative cost centers
Acid test ratio
9. An entity that owns other companies.
Investor
Parent organization
Service centers
Allowance for uncollectibles
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.
Footnotes
Present value of an annuity
HMO
Top-down/bottom-up approach
11. The total amount of multiyear debt due in future years.
Temporarily restricted net assets
Line-item budget
Long-term debt - net of current portion
Financing mix
12. An investment that generates an annuity for an indefinite period of time - basically forever.
Cash flows from financing activities
Perpetuity
Coupon payment
Basic accounting equation
13. The costs of a service after taking into account its direct and fair share of allocated costs.
Fully allocated costs
Contribution margin
Line-item budget
Accrued expenses
14. (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;
Quick ratio
Revenue enhancement
Return on net assets
Operating expenses
15. 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.
Payback
Financing mix
Periodic payments
Non-current liabilities
16. 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.
Opportunity cost
Disbursement float
Discount rate
Certainty
17. [Total Liabilities/ Net assets]
Debt to equity
Mail float
Transaction
Liabilities
18. 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
Fixed assets
Certainty
ABC
Net Assets
19. A section of the statement of cash flows used to report such activities as borrowing and paying back loans.
Coupon
Fixed assets
Liquidity ratios
Financing activities
20. The elapsed time between financial statements. Common accounting periods
Other revenues
Assets
Market rate of interest
Accounting period
21. 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.
Disbursement float
Accounting period
Comparative approach
Revenue budget
22. I) Organizations that have a special designation because they provide goods or services that result in needed community benefit. In turn - such organizations are not required to pay most taxes. 2) The designation of an organization as one that is not
Operating revenues
Not-for-profit
Beginning inventory
Cost Accounting
23. 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.
Effectiveness
Total asset turnover
Allocation base
Controlling activities
24. A borrower's assets on which a lender has legal claim if a borrower defaults on a loan.
Collateral
Mission statement
Clinical cost centers
MV
25. The rate of return required to undertake a project. Also called the hurdle rate or discount rate.
Budget variance
Net Assets
Cost of capital
Volume diversity
26. 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
Properties and equipment
Retained earnings
Performance measure
Bond rating
27. Generally - assets that will be used or consumed within one year. Some organizations use a period of less than one year.
Step Down
Cost Accounting
Capital structure decision
Current assets
28. The resources owned by the organization. It is one of the three major categories on the balance sheet.
Accounts payable
Average Days Inventory
Assets
HMO
29. An entity that temporarily grants the use of money or an asset to another in return for compensation - usually in the form of interest.
IRR
Lender
Billing float
Donation
30. Costs (such as rent - administration - insurance - etc. that are shared by a number of services or departments and cannot easily be broken down to the services attributable to each (surgery - emergency medicine - etc.). Also called joint costs.
Strategic financial planning
Expense cost variance
Common costs
Cash budget
31. An organization's financial obligations that are to be paid within one year.
Controlling activities
Cash and cash equivalents
Bond rating
Current liabilities
32. Portion of the profits the organization keeps in-house to use in support of its mission.
SWOT analysis
Single/Simple Step
Retained earnings
Tax-exempt bonds
33. When products are manufactured in batches in different sizes - and overhead activities are affected by the size of the batch being produced
Assets
Volume diversity
Matching principle
Leverage
34. Costs that stay the same in total over the relevant range as volume increases - but that change inversely on a per unit basis.
Fixed costs
Cost
Cost avoidance
Leverage
35. Proceeds lost by foregoing other opportunities.
Cost Accounting
Responsibility center
Step Down
Opportunity cost
36. The increase in the value of an investment from the time it is purchased until the time it is sold.
Capital appreciation
Allocation base
Long-term debt - net of current portion
Increase in unrestricted net assets
37. Highly liquid current assets such as interest-bearing savings and checking accounts.
Cash equivalents
Depreciation
Net working capital
Asset Management ratios
38. (non-operating revenues/total operating revenues)- A ratio that reflects how dependent the organization is on non-patient care related net income.
Non-current assets
Non-operating ratio
Permanently restricted net assets
Deferred revenues
39. Literally non-movable assets. Generally used to refer to buildings and equipment.
Fixed assets
Capital financing
Allocation
Current liabilities
40. An entity that is owed money for lending funds or supplying goods or services on credit.
Disbursement float
Transaction
Cash flows from financing activities
Creditor
41. A legal obligation to pay the holder of the note or lien.
Ending inventory
Notes payable
Cost
Bond rating agency
42. Service center costs are allocated to both mission centers and other service centers
Present value of an annuity
Long-term debt to net assets ratio
IRR
Step Down
43. Requiring the patient to pay part of his/her health care bill. These payments are used to prevent over-utilization of services.
Co-payments
Operating budget
Perpetuity
Volume diversity
44. 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
Administrative cost centers
Acid test ratio
Inflation
HMO
45. 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.
Collections policies and procedures
Cash basis of accounting
Coupon rate
Beginning inventory
46. [net assets/total assets)- This ratio reflects the proportion of total assets financed by equity. In for-profit organizations it is called the equity to total asset ratio and is calculated using the formula [owners' equity/total assets).
Spillover cash flows
Net working capital
Profitability ratios
Net assets to total assets
47. Current assets. Net working capital equals current assets –current liabilities.
Fixed (interest) rate debt
Operating income
Performance measure
Working capital
48. Opposite of the authoritarian approach. The roles and responsibilities of the budgeting process are diffused throughout the organization. Often called the participatory approach.
Allowance for uncollectibles
Administrative cost centers
Top-down/bottom-up approach
Cost
49. 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.
Capital structure ratios
Float
Accrual basis of accounting
Investment grade
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
Net patient service revenue
Deferred revenues
Current ratio