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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. An organization whose profits can be distributed outside the organization and must pay taxes. Also called investor-owned organizations.






2. 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.






3. 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.






4. 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)






5. The total amount of multiyear debt due in future years.






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






7. Portion of profit an organization distributes to investors. By law - only investor-owned health care organizations can distribute dividends outside the organization.






8. 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.






9. The amount of the total revenue variance that occurs because the actual average rate charged varies from that originally budgeted. It can be calculated using the formula: (actual rate -budgeted rate) x actual volume.






10. The cumulative amount of depreciation recognized on an asset since its purchase. An asset's book value is equal to its purchase price less the amount of accumulated depreciation.






11. Agencies that assess the "credit worthiness" of an organization. The two major rating agencies are Moody's and Standard & Poor.






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






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






14. Amounts earned by the organization from the provision of service or sale of goods.






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






16. The bottom line in the statement of operations. It includes such items as operating and non-operating income - contributions of long-lived assets - transfers to parent - and extraordinary items.






17. 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.






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






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






20. Organizational units primarily responsible for providing services and earning a profit based on the health care services provided.






21. Organizational units responsible for their own costs that provide administrative support to other organizational units or the organization






22. A note payable that has as collateral real assets and that requires periodic payments.






23. 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.






24. The difference between what was planned (budgeted) and what was achieved (actual).






25. 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






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






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






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






29. (excess of revenues over expenses/total assets)- A measure of how much profit is earned for each dollar invested in assets. In for-profit organizations it is called return on assets and is calculated as: net income/assets.






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






31. (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






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






33. [Total assets/Net Assets]






34. Demonstrates the ability to pay off long term debt






35. The revenue and expense budgets of an organization.






36. 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.






37. The process of adjusting for the time value of money backward in time to present value. See also Compounding.






38. Proceeds lost by foregoing other opportunities.






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






40. A security interest in one or more assets granted to lenders in a secured loan.






41. 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.






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






43. Cash inflows and outflows resulting from financing activities - such as obtaining grants or endowments - or from borrowing or paying back long-term debt.






44. The changes in cash resulting from the normal operating activities of the organization.






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






46. One of the four major financial statements. It explains the changes in net assets from one period to the next on the balance sheet. Also called statement of changes in owners' equity in a for-profit business.






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






48. 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.






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






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