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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 organization's legal obligations to pay its creditors. Liabilities are classified as current and non-current. Liabilities are one of the three major categories on the balance sheet and are part of the fundamental accounting equation.






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






3. A section of the statement of cash flows used to report such activities as borrowing and paying back loans.






4. A legal obligation to pay the holder of the note or lien.






5. [Total Revenues/ Total Assets]






6. The rise in an economy's general level of prices.






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






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






9. Current assets. Net working capital equals current assets –current liabilities.






10. The budget used to forecast operating expenses.






11. 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.






12. Opposite of the authoritarian approach. The roles and responsibilities of the budgeting process are diffused throughout the organization. Often called the participatory approach.






13. The section of the statement of cash flows that reports the total change in cash and cash equivalents over the accounting period.






14. The cash flows derived from an organization's operating activities.






15. Organizational units primarily responsible for providing services and earning a profit based on the health care services provided.






16. 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.






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






18. The difference between the initial amount paid for an investment and the related future cash inflows after they have been adjusted (discounted) by the cost of capital.






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






20. An assignment or grading of the likelihood that an organization will not default on a bond.






21. [(cash + marketable securities)/current liabilities). A liquidity ratio that measures how much cash and marketable securities are available to payoff all current liabilities.






22. Organizational units responsible for providing health care related services to clients - patients - or enrollees - and the related costs thereof.






23. 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






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






25. [Total Liabilities/ Net assets]






26. The amount expected to be collected from payors. It is calculated as: gross accounts receivable – discounts and allowances – allowance for un-collectibles.






27. [net assets/total assets)- This ratio reflects the proportion of total assets financed by equity. In for-profit organizations it is called the equity to total asset ratio and is calculated using the formula [owners' equity/total assets).






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






29. (excess of revenues over expenses/net assets)- In not-for-profit health care organizations - it measures the rate of return for each dollar in net assets. In for-profit organizations - it measures the rate of return for each dollar in owners' equity;






30. Assets that have a useful life greater than one year - such as plant - property - and equipment. Plant and equipment are depreciated over time; land (property) is not.






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






32. The amount of supplies used to provide a service or good.






33. When different products use overhead related services in different proportions - and when the costs of those services are significantly different - The situation present when products consume overhead in different proportions.






34. An entity that sells bonds in order to raise money.






35. 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.






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






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






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






39. The elapsed time between financial statements. Common accounting periods






40. Costs that stay the same in total over the relevant range as volume increases - but that change inversely on a per unit basis.






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






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






43. The resources owned by the organization. It is one of the three major categories on the balance sheet.






44. 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.






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






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






47. The revenue and expense budgets of an organization.






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






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






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