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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. An organization whose profits can be distributed outside the organization and must pay taxes. Also called investor-owned organizations.






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






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






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






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






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






7. 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.






8. The revenue and expense budgets of an organization.






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






10. A statement intended to guide the organization into the future by identifying the unique attributes of the organization - why it exists - and what it hopes to achieve.






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






12. The process of adjusting for the time value of money backward in time to present value. See also Compounding.






13. A balance sheet account that estimates the total amount of customer accounts receivable that will not be collected. It is also called allowance for bad debts and allowance for doubtful accounts.






14. Supplementing traditional sources of revenue with new sources.






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






16. [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?






17. The current traded rate for similar risk securities.






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






19. A note payable that has as collateral real assets and that requires periodic payments.






20. 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






21. Series of payments over time - such as interest paid to bondholders.






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






23. Ratios that measure how the organization's assets are financed and/or whether the organization can take on new debt.






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






25. [Total Liabilities/ Net assets]






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






27. 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.






28. 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.






29. 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.






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






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






32. The expenses incurred from an organization's operating activities.






33. Financial obligations that will be paid off over a time period longer than one year






34. 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).






35. Cash flows that occur solely as a result of undertaking a project. Basically the marginal difference between alternatives.






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






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






38. [Surplus/Operating Revenues]






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






40. Literally non-movable assets. Generally used to refer to buildings and equipment.






41. I) Calculating interest using the compound interest method. 2) Adjusting for the time value of money forward in time to a future value. See also Compound interest method and Discounting.






42. The central document of the planning/control cycle. It identifies revenues and resources that will be needed by an organization to achieve its goals and objectives.






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






44. 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






45. 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.






46. [(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.






47. [operating income/total operating revenues]- The proportion of profit remaining after subtracting total operating expenses from operating revenues.






48. What a series of equal payments in the future is worth today taking into account the time value of money.






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






50. [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).