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






2. 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.






3. 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






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






5. Operating income plus other income. This is analogous to net income before taxes in for-profit entities.






6. A contract between a lender and a potential borrower preauthorizing the potential borrower's right to borrow up to a specific amount on request as long as they fulfill the terms and conditions of the contract. Also called a letter of credit.






7. The percentage of each asset relative to total assets.






8. The budget used to forecast operating expenses.






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






10. Assets that have a useful life greater than one year - such as plant - property - and equipment. Plant and equipment are depreciated over time; land (property) is not.






11. 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.






12. The absence of risk in an investment.






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






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






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






16. Ratios that measure how efficiently an organization is using its assets to produce revenues.






17. Revenue is recorded when goods or services are delivered






18. The sources of funds to finance the non-current assets of the organization. Also the debt and equity of the organization.






19. [(cash + marketable securities)/current liabilities). A liquidity ratio that measures how much cash and marketable securities are available to payoff all current liabilities.






20. A legal obligation to pay the holder of the note or lien.






21. 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.






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






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






24. The process of distributing service center costs to mission centers - to determine the full cost of each mission center






25. 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.






26. 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.






27. 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






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






29. 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






30. The section of the expense budget that forecasts salary and benefits.






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






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






33. The amount remaining after subtracting variable costs from revenues. When the organization is not at capacity - it is the "profit" the organization makes on providing each new unit that is available to cover all other costs. Contribution margin may b






34. 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.






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






36. 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.






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






38. Funds provided by a private entity or individual without the requirement of repayment. Donations can either be restricted or unrestricted.






39. The ability of an organization to find new ways to operate that obviate the need for certain classes of costs - such as doing procedures on an outpatient rather than inpatient basis.






40. Current assets. Net working capital equals current assets –current liabilities.






41. One of the four major financial statements. It answers the question: Where did our cash come from and where did it go during the accounting period?






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






43. The revenue and expense budgets of an organization.






44. 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.






45. The degree to which standards are met.






46. 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.






47. Cash flows that have been adjusted to their present value to account for the cost of capital (over time) and the time value of money.






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






49. Financing used expressly for the purchase of non-current assets.






50. Irregular cash flows - typically occurring at the end of the life of a project.