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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 entity that gives capital to another entity in expectation of a financial or non-financial return.






2. Demonstrates the ability to pay off long term debt






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






4. 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.






5. The absence of risk in an investment.






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






7. 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






8. [Total assets/Net Assets]






9. The income (operating revenues -operating expenses) earned in non-health-care related activities.






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






11. Organizational units responsible for providing services and controlling their costs. There are two major types: clinical cost centers and administrative cost centers.






12. [(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






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






14. That process of budgeting where the environmental assessment and planning of future activities are largely decided upon by a few individuals - and the budget is essentially dictated to the rest of the organization. Often called authoritarian approach






15. [current assets/current liabilities].- This liquidity ratio measures the proportion of all current assets to all current liabilities to determine how easily current debt can be paid off. It is one of the most commonly used ratios.






16. Decisions regarding the acquisition of capital assets. The capital investment decision should be separate from the decision on how to finance capital assets.






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






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






19. [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?






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






21. 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.






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






23. 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.






24. The resources owned by the organization. It is one of the three major categories on the balance sheet.






25. 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.






26. An entity that owns other companies.






27. The cash flows derived from an organization's operating activities.






28. 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.






29. The activities of an organization directly related to its main line of business.






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






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






32. {current liabilities/[(total expenses






33. 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.






34. Full-time equivalent employees. Two half-time employees equal one FTE.






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






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






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






38. Each service center






39. 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.






40. 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.






41. Internal rate of return. The percentage return on an investment. It is the rate of return at which the net present value equals zero. Often used as a comparison to cost of capital.






42. [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).






43. 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.






44. If a project is undertaken - these cash flows are the indirect increases or decreases in cash flows that will occur elsewhere in the organization.






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






46. The amount of time between when an organization receives a service and pays for it.






47. 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






48. 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.






49. General and administrative expenses. Operating expenses that are not contained in the labor or supplies budgets.






50. How an organization chooses to finance its working capital needs.