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






2. An entity that owns other companies.






3. 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.






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






5. Ratios that answer the question: How well is the organization positioned to meet its short-term obligations?






6. Amounts the organization is obligated to pay others - including suppliers and creditors.






7. The difference between current assets and current liabilities.






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






9. [long-term debt/net assets]- A measure of the proportion of an organization's assets that are financed by debt as opposed to equity. In for-profit organizations - it is called the long-term debt to equity ratio and is calculated using the formula [lo






10. Opposite of the authoritarian approach. The roles and responsibilities of the budgeting process are diffused throughout the organization. Often called the participatory approach.






11. 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.






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






13. 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.






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






15. 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).






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






17. The revenue that the organization has a right to collect. It is computed as: gross patient service revenues – contractual allowance and charity care.






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






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






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






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






22. Assets that have restrictions on their use which will be removed either with the passage of time or the occurrence of some event.






23. Each service center






24. The section of the expense budget that forecasts salary and benefits.






25. 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






26. The balance sheet category that includes actual money on hand as well as money equivalents - such as savings and checking accounts. It excludes cash restricted as to its use for something other than current operations.






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






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






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






30. An entity that sells bonds in order to raise money.






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






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






33. 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.






34. A borrower's assets on which a lender has legal claim if a borrower defaults on a loan.






35. The process of distributing service center costs to mission centers - to determine the full cost of each mission center






36. 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.






37. The revenue and expense budgets of an organization.






38. [(actual cost per unit -budgeted cost per unit) x actual volume).- The difference between the variable expenses that would have been expected at the actual volume and those actually incurred.






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






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






41. A situation in which if one project is implemented the other(s) will not be.






42. [(cash + marketable securities)/current liabilities). A liquidity ratio that measures how much cash and marketable securities are available to payoff all current liabilities.






43. (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;






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






45. 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.






46. A section of the statement of cash flows used to report such activities as borrowing and paying back loans.






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






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






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






50. Amounts earned by the organization from the provision of service or sale of goods.