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ACCA Financial Management

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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. 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.

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

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

4. 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.

5. Debt to be paid off in a period longer than one year.

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

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

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

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

10. [Total Revenues/ Total Assets]

11. Supplementing traditional sources of revenue with new sources.

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

13. [Total Liabilities/ Net assets]

14. Costs not traced to a cost object - but that must eventually be allocated across cost objects. See also Direct costs.

15. 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.

16. The difference between the initial amount paid for an investment and the related future cash inflows after they have been adjusted (discounted) by the cost of capital.

17. 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

18. 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.

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

20. Market value. The price at which something - such as bonds and stocks - could be bought or sold today on the open market.

21. Revenues generated from an organization's operating activities.

22. Cash inflows and outflows for the organization resulting from investing activities such as purchasing and selling investments or investing in itself by purchasing or selling non-current assets. It also includes transfers to and from the parent corpor

23. Organizational units responsible for providing health care related services to clients - patients - or enrollees - and the related costs thereof.

24. 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.

25. 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.

26. 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.

27. A security whose interest rate does not change during the lifetime of the bond.

28. A budget which presents not only line items and programs but also the performance goals that each program can be expected to attain. See also Line item budget and Program budget.

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

31. The budget used to forecast operating expenses.

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

33. The absence of risk in an investment.

34. I) Measuring inputs against outputs. 2) The cost of service per unit rendered.

35. Proceeds lost by foregoing other opportunities.

36. Operating income not reported elsewhere under revenues - gains - and other support.

37. [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?

38. Stated interest rate on a bond - as promised by the issuer.

39. [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).

40. Bonds that hold the health care provider's real property and equipment as security or collateral in case of default.

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

42. One of the four major financial statements. It explains the changes in net assets from one period to the next on the balance sheet. Also called statement of changes in owners' equity in a for-profit business.

43. Activities that provide guidance and feedback to keep the organization within its budget - such as staff meetings - regular reports - and bonuses.

44. The unit of service which we wish to know the cost for (hospital admission - classroom hour - course - etc.)

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

46. 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

47. The delay between providing the service and getting the bill to the patient or third party. There are two aspects of billing float: assembling the bill and delivering the bill to the patient or third-party payor.

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

49. Assets that have a physical presence.

50. 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