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ACCA Financial Management

Instructions:
  • Answer 50 questions in 15 minutes.
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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. Budgets that typically cover two to five years.






2. Financial and non-financial standards against which organizational performance is measured.






3. Return on investment. The percentage gain or loss experienced from an investment.






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






5. The budget format that lists revenues and expenses by category - such as labor - travel - and supplies. Categories are sometimes broken down into sub-categories. See also Performance budget and Program budget.






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






7. That point at which total revenues equal total costs. It is described by the equation: (price x volume) = fixed costs + (variable cost per unit x volume).






8. [Net Accounts Receivable/(Revenue/356)]






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






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






11. Highly liquid current assets such as interest-bearing savings and checking accounts.






12. 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.






13. Capital investment decisions designed to increase the operational capability of a health care organization.






14. Monies received that have not yet been earned. One of the most common deferred revenues is the receipt of capitation on the basis of per member per month (PMPM).






15. What a series of equal payments in the future is worth today taking into account the time value of money.






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






17. A transaction that reduces the risk of an investment.






18. Assets = Liabilities + Net Assets (aka Equity).






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






20. 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.






21. 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.






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






23. Traces indirect costs to activity that uses them. Overhead collected in pools and distributed to cost object by cost drivers.






24. 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.






25. Proceeds lost by foregoing other opportunities.






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






27. 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)






28. Private entity or individual who makes a donation






29. [total revenues/total assets].- This ratio measures the overall efficiency of the organization's assets to produce revenue. It answers the question: For every dollar in assets - how many dollars of revenue are being generated?






30. An assignment or grading of the likelihood that an organization will not default on a bond.






31. The section of the expense budget that forecasts the cost of those supplies that will not vary as a direct result of changes in the amount of services provided (such as administrative office supplies).






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






33. Recording expenses associated with making revenue at the same time as revenues are recognized






34. 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.






35. 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.






36. Future value. What an amount invested today (or a series of payments made over time) will be worth at a given time in the future using the compound interest method. This accounts for the time value of money. See also Present value.






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






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






39. Setting aside cash to meet unexpected demands - such as unexpected maintenance of a facility or piece of equipment.






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






41. 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.






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






43. Generally - assets that will be used or consumed within one year. Some organizations use a period of less than one year.






44. 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






45. A series of equal cash flows made or received at regular time intervals. Ordinary annuities occur at the end of each period whereas annuities due occur at the beginning of each period.






46. 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.






47. 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.






48. An entity that owns other companies.






49. 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.






50. One of the four major financial statements. It summarizes the organization's revenues and expenses during an accounting period as well as other items that affect its unrestricted net assets. It is analogous to - but different from - an income stateme