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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. 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.






2. 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.






3. An entity that temporarily grants the use of money or an asset to another in return for compensation - usually in the form of interest.






4. 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.






5. The elapsed time between financial statements. Common accounting periods






6. 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






7. The budget that forecasts the operating and - in some cases - the non- operating revenues that will be earned during the budget period.






8. 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.






9. The purchase of assets with contributed and internally generated funds. See also Debt financing.






10. 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.






11. The revenue and expense budgets of an organization.






12. 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.






13. Operating income not reported elsewhere under revenues - gains - and other support.






14. [(cash + marketable securities + net accounts receivable)/current liabilities)- A measure of the organization's liquidity.






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






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






17. [(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






18. A borrower's assets on which a lender has legal claim if a borrower defaults on a loan.






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






20. [Total Revenues/(Net Fixed Assets)]. This ratio measures the number of dollars generated for each dollar invested in an organization's fixed assets (i.e. plant and equipment).






21. Costs that stay the same in total over the relevant range as volume increases - but that change inversely on a per unit basis.






22. Capital investment decisions designed to increase an organization's strategic position.






23. A balance sheet account that estimates the total amount of customer accounts receivable that will not be collected. It is also called allowance for bad debts and allowance for doubtful accounts.






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






25. Demonstrates the ability to pay off long term debt






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






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






28. A technique to evaluate an organization's strengths - weaknesses - opportunities - and threats. Also called a WOTS-up analysis.






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






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






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






32. The central document of the planning/control cycle. It identifies revenues and resources that will be needed by an organization to achieve its goals and objectives.






33. The section of the statement of cash flows that reports the total change in cash and cash equivalents over the accounting period.






34. 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






35. [(actual cost per unit -budgeted cost per unit) x actual volume).- The difference between the variable expenses that would have been expected at the actual volume and those actually incurred.






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






37. 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.






38. Price times total quantity.






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






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






41. Time delays in the billing and collection process. There are four categories of float: billing - collection - transit - and disbursement. An organization's goal is to optimize float for incoming revenues and outgoing bills.






42. Non-operating income.






43. {[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).






44. [total revenues/net plant & equipment]- This ratio measures the number of dollars generated for each dollar invested in an organization's plant and equipment.






45. 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.






46. {current liabilities/[(total expenses






47. A security whose interest rate does not change during the lifetime of the bond.






48. 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.






49. Directly related to the purposes of the organization and the delivery of services






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