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






2. Responsibility centers responsible for making a certain return on investments.






3. 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.






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. A method by which the organization develops its strategies and budgets to meet future financial targets.






6. Revenue is recorded when goods or services are delivered






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






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






9. 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






10. [Total Revenues/ Total Assets]






11. 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.






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






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






14. [total revenues/net plant & equipment]- This ratio measures the number of dollars generated for each dollar invested in an organization's plant and equipment.






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






16. process of measuring the resources (costs) used to produce results.






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






18. 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.






19. [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).






20. Price times total quantity.






21. [(excess of revenues over expenses + interest expense)/interest expense].- This ratio enables creditors and lenders to evaluate an organization's ability to generate earnings necessary to meet interest expense requirements. In for-profit organization






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






23. 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






24. 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.






25. (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;






26. 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.






27. The budget used to forecast operating expenses.






28. (tax exempt revenue bonds)- Bonds in which the interest payments to the investor are exempt from the IRS. These bonds must be issued by an organization that has received tax exemption from the IRS and be used to fund projects that qualify as "exempt






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






30. 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).






31. Each service center






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






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






34. Private entity or individual who makes a donation






35. 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.






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






37. 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.






38. 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.






39. [Total assets/Net Assets]






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






41. The changes in cash resulting from the normal operating activities of the organization.






42. A catchall category for miscellaneous expenses and losses not included in other categories (telephone - travel - meals - etc.).






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






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






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






46. Requiring the patient to pay part of his/her health care bill. These payments are used to prevent over-utilization of services.






47. A certificate attached to a bond representing the amount of interest to be paid to the holder.






48. The amount of inventory on hand at the end of an accounting period. See also Beginning inventory.






49. A security interest in one or more assets granted to lenders in a secured loan.






50. 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.