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ACCA Financial Management
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Subjects
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certifications
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business-skills
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acca
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. [(actual volume -budgeted volume) x budgeted cost per unit).- The portion of total variance that is due to actual volume being either higher or lower than budgeted volume. It is the difference between the expenses forecast in the original budget and
Administrative profit centers
Discounting
Expense volume variance
Expense cost variance
2. 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.
Disbursement float
Bad debt
Payback
Direct costs
3. Organizational units responsible for their own costs that provide administrative support to other organizational units or the organization
Return on net assets
Performance budget
Administrative cost centers
Direct costs
4. Financial and non-financial standards against which organizational performance is measured.
Non-operating revenues
Bonds
Liabilities
Performance measure
5. The idea that a dollar today is worth more than a dollar in the future.
Operating margin
Statement of changes in net assets
Direct costs
Time value of money
6. 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.
Billing - collections - and disbursement policies and procedures
Revenue rate variance
Tax-exempt bonds
Mortgage bonds
7. 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.
Budget
Discounted cash flows
Top-down/bottom-up approach
Statement of changes in net assets
8. Portion of profit an organization distributes to investors. By law - only investor-owned health care organizations can distribute dividends outside the organization.
Average Days Inventory
Dividends
Capital assets
Capital appreciation
9. {[cash + marketable securities)/[(operating expenses -depreciation)/ 365].- A ratio that indicates the number of days' worth of expenses an organization can cover with its most liquid assets (cash and marketable securities).
Days cash on hand
Retained earnings
Statement of changes in net assets
Liabilities
10. [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.
Cost centers
Current ratio
Return on total assets
Line of credit
11. Costs that are traced to a cost object. See also Indirect costs and Cost object.
Step-down method
Direct costs
Net increase (decrease) in cash and cash equivalents
Non-current assets
12. An entity that owns other companies.
Cash flows from operating activities
Properties and equipment
Volume diversity
Parent organization
13. An organization's financial obligations that are to be paid within one year.
Hedge
Current liabilities
Not-for-profit
Bad debt
14. A catchall category for miscellaneous expenses and losses not included in other categories (telephone - travel - meals - etc.).
Other expenses
Bond rating
Compounding
Hedge
15. 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.
Line of credit
Long-term debt to net assets ratio
Matching principle
Direct costs
16. Ratios that measure how the organization's assets are financed and/or whether the organization can take on new debt.
Allocation
Performance measure
ABC
Capital structure ratios
17. Proceeds lost by foregoing other opportunities.
Strategic planning
Opportunity cost
Financing activities
Service centers
18. [(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
Debt service coverage
Performance budget
Cost centers
Non-operating revenues
19. The system of accounting that recognizes revenues when cash is received and expenses when cash is paid out. See also Accrual basis of accounting.
Operating expenses
Accountability
Cash basis of accounting
Current liabilities
20. An assignment or grading of the likelihood that an organization will not default on a bond.
Net accounts receivable
Bond rating
Non-current liabilities
Not-for-profit
21. Assets that have restrictions on their use which will be removed either with the passage of time or the occurrence of some event.
Spillover cash flows
Asset Management ratios
Horizontal analysis
Temporarily restricted net assets
22. [Surplus/Operating Revenues]
Long Term Solvency ratios
Coupon rate
Profit margin
Certainty
23. 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.
Loan amortization schedule
Opportunity cost
Leverage
Return on total assets
24. The amount remaining after subtracting variable costs from revenues. When the organization is not at capacity - it is the "profit" the organization makes on providing each new unit that is available to cover all other costs. Contribution margin may b
FTE
Base Budget
Contribution margin
Non-operating revenues
25. [Net Assets/Total Assets]. This ratio reflects the proportion of total assets financed by equity.
Strategic decisions
Net Assets to Total Assets
Top-down budgeting
Revenue rate variance
26. Full-time equivalent employees. Two half-time employees equal one FTE.
Amortization of a loan
FTE
Cash basis of accounting
Cost centers
27. An investment that generates an annuity for an indefinite period of time - basically forever.
Perpetuity
Net proceeds from a bond issuance
Assets
Discount rate
28. Generally - assets that will be used or consumed within one year. Some organizations use a period of less than one year.
Return on total assets
Creditor
Top-down budgeting
Current assets
29. The budget used to forecast - and in some cases justify - the expenditures (and in some cases the sources of financing) for non-current assets.
Coupon rate
Capital budget
Net assets released from restriction
Average Days Receivable
30. 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.
Mutually exclusive projects
Lien
Comparative approach
Cash flows from investing activities
31. Amounts given to the organization for operating purposes - such as governmental appropriations and unrestricted donations.
Net working capital
Net patient service revenue
Other support
Loan amortization schedule
32. 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
Statement of operations
Revenue rate variance
Mail float
Long-term investments
33. Costs that stay the same in total over the relevant range as volume increases - but that change inversely on a per unit basis.
Non-operating ratio
Fixed costs
Administrative profit centers
Multiyear budget
34. Organizational units primarily responsible for providing services and earning a profit based on the health care services provided.
Cost
Traditional profit centers
Mutually exclusive projects
Mortgage bonds
35. An approach to analyzing the financial condition of an organization based on ratios calculated from line items found in the financial statements. There are four major categories of ratios: liquidity - profitability - capitalization - and activity.
Net working capital
Ratio analysis
Accounts payable
For-profit
36. 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).
Deferred revenues
HMO
Bonds
Return on net assets
37. Non-operating income.
Indirect costs
Other income
Horizontal analysis
Precautionary purposes
38. 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
Base Budget
Cash flows from financing activities
Operating expenses
Top-down budgeting
39. Revenue is recorded when goods or services are delivered
Single/Simple Step
Bonds
Billing - collections - and disbursement policies and procedures
Realization principle
40. I) Measuring inputs against outputs. 2) The cost of service per unit rendered.
Efficiency
Periodic payments
Basis of Allocation
Days cash on hand
41. 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
SWOT analysis
Balance sheet
Liquidity
ABC
42. [Total assets/Net Assets]
Service centers
Budget
Top-down/bottom-up approach
Leverage
43. A series of equal cash flows made or received at regular time intervals. Ordinary annuities occur at the end of each period whereas annuities due occur at the beginning of each period.
Net working capital
Present value of an annuity
Annuity
Financing activities
44. IA category of non-current assets not intended to be used for operations - but only for capital appreciation and dividends - and that will be held for a period longer than one year.
Long-term investments
Issuer
Coupon rate
Allocation base
45. Amounts the organization is obligated to pay others - including suppliers and creditors.
Compounding
Accounts payable
For-profit
Cost Accounting
46. A security interest in one or more assets granted to lenders in a secured loan.
Creditor
Lien
Final cost object
Co-payments
47. Capital investment decisions designed to increase an organization's strategic position.
Fully allocated costs
Statement of changes in net assets
Strategic decisions
Indirect costs
48. Donated assets that have restrictions on their use which will never be removed.
Discounting
Time value of money
Permanently restricted net assets
Operating margin
49. Operating income plus other income. This is analogous to net income before taxes in for-profit entities.
Single/Simple Step
Excess of revenues over expenses
Donation
Capital budget
50. The amount of inventory on hand at the beginning of an accounting period. See also Ending inventory.
Cost of capital
Annuity
Beginning inventory
Capital financing