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ACCA Financial Management

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  • Match each statement with the correct term.
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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. Debt to be paid off in a period longer than one year.

2. Assets that have a physical presence.

3. 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

4. (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.

5. How an organization chooses to finance its working capital needs.

6. The degree of dispersion of responsibility within an organization. See also Centralization.

7. 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?

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

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

10. Bonds that have received a rating ranging from AM to BBB (at S&P) - or Aaa to Bbb (Moody's) - of which the highest are called quality ratings.

11. The gradual process of paying off debt through a long series of equal periodic payments. Each payment covers a portion of the principal plus current interest. The periodic payments are equal over the lifetime of the loan - but the proportion going to

12. Supplementing traditional sources of revenue with new sources.

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

14. The budget used to forecast operating expenses.

15. The planning process that identifies the organization's mission and strategy in order to position itself for the future.

16. 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.

17. 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.

18. When products are manufactured in batches in different sizes - and overhead activities are affected by the size of the batch being produced

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

20. Expenses of the organization incurred in non-health-care related activities.

21. The idea that a dollar today is worth more than a dollar in the future.

22. Ratios designed to answer the question: How profitable is the organization?

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

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

25. Being subject to sanctions with respect to carrying out responsibilities.

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

27. The system of accounting that recognizes revenues when earned and expenses when resources are used. This method is used by most non-governmental health care organizations. See also Cash basis of accounting.

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

29. Organizational units responsible for providing administrative support at a profit to other organizational units or to the organization as a whole and/or raising funds externally.

30. 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

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

32. Decisions regarding the relative amount of debt and equity used to finance the organization's non-current assets.

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

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

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

36. 1) The degree to which power and authority is concentrated in an organization. 2) The degree to which a variety of services are offered at a single location.

37. [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?

38. 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.

39. Portion of profit an organization distributes to investors. By law - only investor-owned health care organizations can distribute dividends outside the organization.

40. Market value. The price at which something - such as bonds and stocks - could be bought or sold today on the open market.

41. [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

42. Capital investment decisions designed to increase the operational capability of a health care organization.

43. Irregular cash flows - typically occurring at the end of the life of a project.

44. The difference between what was planned (budgeted) and what was achieved (actual).

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

46. The amount of inventory on hand at the end of an accounting period. See also Beginning inventory.

47. 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.

48. Budgets that typically cover two to five years.

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

50. The income (operating revenues -operating expenses) earned in non-health-care related activities.