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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.
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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. 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






2. 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.






3. The gradual process of paying off debt through a long series of equal periodic payments. Each payment covers a portion of the principal plus current interest. The periodic payments are equal over the lifetime of the loan - but the proportion going to






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






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






6. Cash inflows and outflows resulting from financing activities - such as obtaining grants or endowments - or from borrowing or paying back long-term debt.






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






8. 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.






9. Properties and equipment less accumulated depreciation.






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






11. A category of income that includes unrestricted interest - dividends - and gains from the sale of unrestricted investments.






12. Organizational unit given the responsibility to carry out one or more tasks and/or achieve one or more outcomes.






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






14. Demonstrates the extent to which the organization is earning money from its assets. Not usually as imp for NPs - varies w/ NP.






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






16. 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.






17. [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?






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






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






20. [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.






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






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






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






24. (non-operating revenues/total operating revenues)- A ratio that reflects how dependent the organization is on non-patient care related net income.






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






26. The rate of return required to undertake a project. Also called the hurdle rate or discount rate.






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






28. 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






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






30. (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






31. Financial and non-financial standards against which organizational performance is measured.






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






33. 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.






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






35. A method of allocating costs that are not directly paid for (utilities - rent - administration) into those products or services to which payment is attached (day of care - a brief visit). See also Activity-based costing.






36. The planning process that identifies the organization's mission and strategy in order to position itself for the future.






37. 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.






38. Highly liquid current assets such as interest-bearing savings and checking accounts.






39. 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.






40. The current traded rate for similar risk securities.






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






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






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






44. The system of accounting that recognizes revenues when cash is received and expenses when cash is paid out. See also Accrual basis of accounting.






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






46. Monies received that have not yet been earned. One of the most common deferred revenues is the receipt of capitation on the basis of per member per month (PMPM).






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






48. [(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






49. Capital investment decisions designed to increase an organization's strategic position.






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







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