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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. The category of assets summarizing the amount of the major capital investments of the facility in plant - property - and equipment (PP&E). Plant means buildings - property is land - and equipment includes a wide variety of durable items from beds to






2. Health maintenance organization. Entities that receive premium payments from enrollees with the understanding that the HMO will be financially responsible for all predefined health care required by its enrollees for a specified period of time. The he






3. 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.






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






5. Financing that will be paid back in less than one year.






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






7. 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.






8. The cost of a capital asset (i.e. building or equipment) minus accumulated depreciation.






9. 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






10. 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






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






12. The degree to which standards are met.






13. (excess of revenues over expenses/total assets)- A measure of how much profit is earned for each dollar invested in assets. In for-profit organizations it is called return on assets and is calculated as: net income/assets.






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






15. The amount of supplies used to provide a service or good.






16. The system of accounting that recognizes revenues when earned and expenses when resources are used. This method is used by most non-governmental health care organizations. See also Cash basis of accounting.






17. The budget that projects the organization's cash inflows and outflows. The bottom line in the cash budget is the amount of cash available at the end of the period.






18. An entity that owns other companies.






19. Revenue is recorded when goods or services are delivered






20. An amount owed to the organization that will not be paid. Charity care is not considered a bad debt since nothing is owed to the organization for services provided.






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






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






23. 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.






24. The costs of a service after taking into account its direct and fair share of allocated costs.






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






26. (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;






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






28. [Inventory/ (Cost of Goods Sold/365)]






29. Bonds that have received a rating ranging from AM to BBB (at S&P) - or Aaa to Bbb (Moody's) - of which the highest are called quality ratings.






30. [Surplus/Operating Revenues]






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






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






33. 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.






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






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






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






37. 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.






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






39. Revenues of the organization earned in non-healthcare related activities.






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






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






42. 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.






43. 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






44. The absence of risk in an investment.






45. 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.






46. 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.






47. [net assets/total assets)- This ratio reflects the proportion of total assets financed by equity. In for-profit organizations it is called the equity to total asset ratio and is calculated using the formula [owners' equity/total assets).






48. [Net Assets/Total Assets]. This ratio reflects the proportion of total assets financed by equity.






49. Private entity or individual who makes a donation






50. 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.