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ACCA Financial Management
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acca
Instructions:
Answer 50 questions in 15 minutes.
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Match each statement with the correct term.
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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. [(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
Bad debt
Hedge
Assets
Debt service coverage
2. Market value. The price at which something - such as bonds and stocks - could be bought or sold today on the open market.
MV
Compounding
Fixed costs
Top-down budgeting
3. 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.
Cost
Loan amortization schedule
Net accounts receivable
Expense budget
4. A borrower's assets on which a lender has legal claim if a borrower defaults on a loan.
Basic accounting equation
FTE
Cash and cash equivalents
Collateral
5. Financing that will be paid back in less than one year.
Short-term financing
Operating revenues
Step Down
Lien
6. 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.
Performance measure
Spillover cash flows
Budget variance
Horizontal analysis
7. [Net Accounts Receivable/(Revenue/356)]
Statement of operations
Liquidity ratios
Cost centers
Average Days Receivable
8. An investment that generates an annuity for an indefinite period of time - basically forever.
Average Days Receivable
Market rate of interest
Financing activities
Perpetuity
9. A catchall category for miscellaneous expenses and losses not included in other categories (telephone - travel - meals - etc.).
Investment centers
Inflation
Other expenses
Operating expenses
10. A measure of the income earned from operating activities. It is calculated as: unrestricted revenues - gains - and other support -expenses and losses.
Incremental cash flows
Non-operating expenses
Cost centers
Operating income
11. 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.
Allowance for uncollectibles
Balance sheet
Discount rate
Program budget
12. The cost of activities that take place to produce the final cost object
Inflation
Intermediate Cost Object
Allocation
Net assets to total assets
13. When different products use overhead related services in different proportions - and when the costs of those services are significantly different - The situation present when products consume overhead in different proportions.
Accounting period
Billing float
Product diversity
Not-for-profit
14. The idea that a dollar today is worth more than a dollar in the future.
Time value of money
Ending inventory
Quick ratio
Line-item budget
15. Demonstrates the extent to which the organization is earning money from its assets. Not usually as imp for NPs - varies w/ NP.
Other income
Asset Management ratios
Revenue rate variance
Total asset turnover
16. 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.
Hedge
Investment centers
Coupon payment
Disbursement float
17. 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.
Capital assets
Cash flows from financing activities
Ending inventory
Centralization
18. Literally non-movable assets. Generally used to refer to buildings and equipment.
Fixed assets
Coupon payment
Indirect costs
Fixed (interest) rate debt
19. Budgets that typically cover two to five years.
Effectiveness
Basis of Allocation
Return on total assets
Multiyear budget
20. (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;
Non-regular cash flows
ROI
Intermediate Cost Object
Return on net assets
21. 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.
Ratio analysis
Base Budget
Non-current liabilities
Operating expenses
22. The elapsed time between financial statements. Common accounting periods
Leverage
Mail float
Accounting period
Line-item budget
23. The cash flows derived from an organization's operating activities.
Basis of Allocation
Operating cash flows
Opportunity cost
Capital structure ratios
24. Gross proceeds less the underwriter's fee and other issuance fees.
Program budget
Restricted donation
Non-operating ratio
Net proceeds from a bond issuance
25. [Total Revenues/ Total Assets]
Non-operating ratio
Administrative profit centers
Asset Turnover Ratio
Net proceeds from a bond issuance
26. [(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.
Expense cost variance
Other revenues
Non-operating revenues
Liabilities
27. Donated assets that have restrictions on their use which will never be removed.
Deferred revenues
Donation
Non-operating ratio
Permanently restricted net assets
28. Directly related to the purposes of the organization and the delivery of services
Days cash on hand
Depreciation
Collection float
Mission Center
29. Full-time equivalent employees. Two half-time employees equal one FTE.
FTE
Annuity
Capital budget
Cash flows from operating activities
30. Decisions regarding the acquisition of capital assets. The capital investment decision should be separate from the decision on how to finance capital assets.
Capital investment decisions
Permanently restricted net assets
Base Budget
Cash flows from operating activities
31. A measure of the resources used to generate revenue and/or provide a service. Often used synonymously with costs. See also Costs.
Expenses
Other expenses
Coupon payment
Revenue budget
32. The planning process that identifies the organization's mission and strategy in order to position itself for the future.
Cost centers
Strategic planning
Asset Turnover Ratio
Other income
33. An estimate/measure of how much a tangible asset (such as plant or equipment) has been "used up" during an accounting period. It is an expense that does not require any cash outflow under the accrual basis of accounting. See also Accumulated deprecia
Depreciation
Allocation
Return on total assets
Decentralization
34. Amounts given to the organization for operating purposes - such as governmental appropriations and unrestricted donations.
Other support
Investment grade
Collection float
Operating budget
35. Expenses of the organization incurred in non-health-care related activities.
Non-operating expenses
Service centers
Non-operating revenues
Profitability ratios
36. Organizational units primarily responsible for providing services and earning a profit based on the health care services provided.
Increase in unrestricted net assets
Opportunity cost
Traditional profit centers
Loan amortization schedule
37. A transaction that reduces the risk of an investment.
Budget
Net assets released from restriction
Coupon payment
Hedge
38. A good or service provided in return for some type of compensation.
Inflation
Mortgage
Net assets released from restriction
Transaction
39. Amounts due to the organization from patients - third parties - and others.
Fixed supplies budget
Financing mix
Matching principle
Accounts receivable
40. Recording expenses associated with making revenue at the same time as revenues are recognized
Compounding
Matching principle
Certainty
Mail float
41. The degree of dispersion of responsibility within an organization. See also Centralization.
Decentralization
Fixed asset turnover
Days cash on hand
Operating margin
42. A certificate attached to a bond representing the amount of interest to be paid to the holder.
Disbursement float
Coupon
Realization principle
Operating activities
43. Any product - service - customer - contract - project - process or other work unit for which a separate cost measurement is desired.
Capital investment decisions
Cost object
Co-payments
Service centers
44. 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
Indirect costs
Amortization of a loan
Not-for-profit
Cash flows from investing activities
45. 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.
Responsibility center
Precautionary purposes
Acid test ratio
Loan amortization schedule
46. 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.
Effectiveness
Administrative profit centers
Discounting
IRR
47. The budget that forecasts the operating and - in some cases - the non- operating revenues that will be earned during the budget period.
Discounted cash flows
Revenue budget
Other expenses
Increase in unrestricted net assets
48. Ratios that answer the question: How well is the organization positioned to meet its short-term obligations?
Revenue budget
Liquidity ratios
Fixed assets
Budget
49. 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.
Mission Center
Non-current liabilities
Temporarily restricted net assets
Budget
50. The revenue and expense budgets of an organization.
Revenue rate variance
Other income
Operating budget
Debt service coverage
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