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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 percentage of each asset relative to total assets.






2. (excess of revenues over expenses/total assets)- A measure of how much profit is earned for each dollar invested in assets. In for-profit organizations it is called return on assets and is calculated as: net income/assets.






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






4. 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






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






6. Supplementing traditional sources of revenue with new sources.






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






8. The cost of activities that take place to produce the final cost object






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






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






11. [Total Revenues/ Total Assets]






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






13. I) Measuring inputs against outputs. 2) The cost of service per unit rendered.






14. Properties and equipment less accumulated depreciation.






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






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






17. A measure of the resources used to generate revenue and/or provide a service. Often used synonymously with costs. See also Costs.






18. Financing that will be paid back in less than one year.






19. Decisions regarding the acquisition of capital assets. The capital investment decision should be separate from the decision on how to finance capital assets.






20. Directly related to the purposes of the organization and the delivery of services






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






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






23. 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.






24. Funds provided by a private entity or individual without the requirement of repayment. Donations can either be restricted or unrestricted.






25. The cumulative amount of depreciation recognized on an asset since its purchase. An asset's book value is equal to its purchase price less the amount of accumulated depreciation.






26. [(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.






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






28. A transaction that reduces the risk of an investment.






29. Agencies that assess the "credit worthiness" of an organization. The two major rating agencies are Moody's and Standard & Poor.






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






31. [(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






32. [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?






33. Each service center






34. [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






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






36. 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.






37. 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.






38. The category of assets summarizing the amount of the major capital investments of the facility in plant - property - and equipment (PP&E). Plant means buildings - property is land - and equipment includes a wide variety of durable items from beds to






39. A contract in which the lessee (user) agrees to pay the leassor (owner) a specific amount over a period of time for the use of an asset.






40. {current liabilities/[(total expenses






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






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






43. An entity that temporarily grants the use of money or an asset to another in return for compensation - usually in the form of interest.






44. 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.






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






46. (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






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






48. 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






49. A measure of the income earned from operating activities. It is calculated as: unrestricted revenues - gains - and other support -expenses and losses.






50. Assets = Liabilities + Net Assets (aka Equity).