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Test your basic knowledge |
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. [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).
Other income
Fixed Asset Turnover
Total asset turnover
Transaction
2. The system of accounting that recognizes revenues when cash is received and expenses when cash is paid out. See also Accrual basis of accounting.
Cash basis of accounting
Statement of cash flows
Expense budget
Disbursement float
3. A measure of the resources used to generate revenue and/or provide a service. Often used synonymously with costs. See also Costs.
Inflation
Collections policies and procedures
Non-regular cash flows
Expenses
4. Amounts earned by the organization from the provision of service or sale of goods.
Mail float
Capital structure decision
Net assets released from restriction
Revenues
5. A legal obligation to pay the holder of the note or lien.
Cash flows from operating activities
Service centers
Notes payable
Centralization
6. [(cash + marketable securities)/current liabilities). A liquidity ratio that measures how much cash and marketable securities are available to payoff all current liabilities.
Ratio analysis
Accounts payable
Book value
Acid test ratio
7. 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.
MV
Volume diversity
Accounts payable
Annuity
8. The income (operating revenues -operating expenses) earned in non-health-care related activities.
Non-operating income
Bad debt
Statement of operations
Properties and equipment - net
9. [(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
Operating margin
Bonds
Certainty
Debt service coverage
10. Demonstrates the ability to pay off long term debt
Non-operating ratio
Long Term Solvency ratios
Performance measure
Other income
11. Costs that stay the same in total over the relevant range as volume increases - but that change inversely on a per unit basis.
Accounts payable
Cost centers
Fixed costs
Asset Turnover Ratio
12. Costs not traced to a cost object - but that must eventually be allocated across cost objects. See also Direct costs.
Traditional profit centers
Issuer
Indirect costs
Annuity
13. One of the four major financial statements. It answers the question: Where did our cash come from and where did it go during the accounting period?
Statement of cash flows
IRR
Precautionary purposes
Net assets to total assets
14. Assets = Liabilities + Net Assets (aka Equity).
Basic accounting equation
Working capital
Cash flows from investing activities
Responsibility center
15. [Surplus/Operating Revenues]
Expenses
Mortgage
Profit margin
Breakeven point
16. Financing that will be paid back in less than one year.
Discount rate
Volume diversity
Short-term financing
Current ratio
17. Responsibility centers responsible for making a certain return on investments.
Long-term debt - net of current portion
Investment centers
Traditional profit centers
Asset Management ratios
18. Service center costs are allocated to both mission centers and other service centers
Excess of revenues over expenses
Market rate of interest
Step Down
Financing mix
19. A method by which the organization develops its strategies and budgets to meet future financial targets.
Direct costs
Traditional profit centers
Allowance for uncollectibles
Strategic financial planning
20. The cost of a capital asset (i.e. building or equipment) minus accumulated depreciation.
Tangible assets
Capital structure ratios
Book value
Fixed asset turnover
21. A benefit paid for in advance (rent - insurance - etc.). Also called prepaid expense.
Prepaid assets
Cash flows from operating activities
ABC
Return on total assets
22. Price times total quantity.
Cost centers
Mission Center
Investment centers
Total revenue
23. 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.
Long-term investments
Allowance for uncollectibles
Net proceeds from a bond issuance
Investor
24. Decisions regarding the relative amount of debt and equity used to finance the organization's non-current assets.
Cash basis of accounting
Fully allocated costs
Capital structure decision
Temporarily restricted net assets
25. The rise in an economy's general level of prices.
Revenue enhancement
Mission Center
Inflation
Collections policies and procedures
26. Traces indirect costs to activity that uses them. Overhead collected in pools and distributed to cost object by cost drivers.
Restricted donation
Activity Based Costing
Final cost object
Net assets released from restriction
27. The elapsed time between financial statements. Common accounting periods
Accounting period
Base Budget
Cost centers
Book value
28. Looks at the percentage change in a line item's value from one year to the next using the formula: [(subsequent year -base year)/base year) x 100. See also Vertical analysis.
Notes payable
Operating budget
Contribution margin
Horizontal analysis
29. Ratios that measure how the organization's assets are financed and/or whether the organization can take on new debt.
Cost object
Collections policies and procedures
Capital structure ratios
Current ratio
30. Capital investment decisions designed to increase an organization's strategic position.
Excess of revenues over expenses
Strategic decisions
Expenses
Net Assets to Total Assets
31. Recording expenses associated with making revenue at the same time as revenues are recognized
Cost of capital
Traditional profit centers
Matching principle
Breakeven point
32. Market value. The price at which something - such as bonds and stocks - could be bought or sold today on the open market.
Accrued expenses
Capital investment decisions
MV
Balance sheet
33. 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
Liquidity ratios
Certainty
Fixed assets
Properties and equipment
34. A note payable that has as collateral real assets and that requires periodic payments.
Mortgage
Lender
Responsibility center
Fixed assets
35. The changes in cash resulting from the normal operating activities of the organization.
Average payment period
Lease
Cash flows from operating activities
Financing activities
36. What a series of equal payments in the future is worth today taking into account the time value of money.
MV
Net accounts receivable
Creditor
Present value of an annuity
37. Current assets. Net working capital equals current assets –current liabilities.
Accountability
Working capital
Base Budget
Fixed Asset Turnover
38. When products are manufactured in batches in different sizes - and overhead activities are affected by the size of the batch being produced
FTE
Liquidity ratios
Volume diversity
Tangible assets
39. Assets that provide service for a period exceeding one year. Sometimes referred to as long-term assets.
Fully allocated costs
Top-down budgeting
Cost Accounting
Non-current assets
40. 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.
Program budget
Cash and cash equivalents
Mail float
Short-term financing
41. Portion of the profits the organization keeps in-house to use in support of its mission.
Fixed asset turnover
Leverage
Retained earnings
Financing mix
42. 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.
IRR
Opportunity cost
Lender
Administrative cost centers
43. Generally - assets that will be used or consumed within one year. Some organizations use a period of less than one year.
Net assets to total assets
Current assets
Fixed costs
Fixed (interest) rate debt
44. A transaction that reduces the risk of an investment.
Non-operating ratio
Hedge
Mail float
Cash equivalents
45. (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
Tax-exempt bonds
Dividends
Comparative approach
Not-for-profit
46. 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).
Capital financing
Discounted cash flows
Breakeven point
Collections policies and procedures
47. Agencies that assess the "credit worthiness" of an organization. The two major rating agencies are Moody's and Standard & Poor.
Capital
Traditional profit centers
Mission Center
Bond rating agency
48. [(excess of revenues over expenses + interest expense)/interest expense].- This ratio enables creditors and lenders to evaluate an organization's ability to generate earnings necessary to meet interest expense requirements. In for-profit organization
Bond rating
Opportunity cost
Times interest earned
Net Assets to Total Assets
49. Organizational units responsible for providing services and controlling their costs. There are two major types: clinical cost centers and administrative cost centers.
Cost centers
Traditional profit centers
Operating activities
Accountability
50. Opposite of the authoritarian approach. The roles and responsibilities of the budgeting process are diffused throughout the organization. Often called the participatory approach.
Accounts payable
Expenses
Ratio analysis
Top-down/bottom-up approach