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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
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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. A good or service provided in return for some type of compensation.
Capital investment decisions
Transaction
Total asset turnover
Liabilities
2. Being subject to sanctions with respect to carrying out responsibilities.
Average Days Inventory
Operating budget
Accountability
Controlling activities
3. A method by which the organization develops its strategies and budgets to meet future financial targets.
Strategic financial planning
Other income
Investment grade
Asset Management ratios
4. The section of the expense budget that forecasts salary and benefits.
Asset mix
Efficiency
Assets
Fixed labor budget
5. 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.
Asset mix
Cost
Billing float
Times interest earned
6. Costs that are traced to a cost object. See also Indirect costs and Cost object.
Inflation
Liabilities
Net present value
Direct costs
7. The time between the issuance of the bill and the time funds are available for use by the health care organization. It has two components: mail float and processing float.
Properties and equipment - net
Asset Management ratios
Hedge
Collection float
8. Bonds that hold the health care provider's real property and equipment as security or collateral in case of default.
Mortgage bonds
Fixed labor budget
Mail float
Investor
9. [total revenues/net plant & equipment]- This ratio measures the number of dollars generated for each dollar invested in an organization's plant and equipment.
Revenue enhancement
Financing activities
Fixed asset turnover
HMO
10. The method by which to distribute service center costs to mission centers; in general the one that most accurately measures use by the cost centers that receives its services (food service - # of meals - hospital laundry - # of pounds processed)
Cash basis of accounting
Properties and equipment
Basis of Allocation
Acid test ratio
11. The system of accounting that recognizes revenues when cash is received and expenses when cash is paid out. See also Accrual basis of accounting.
Return on total assets
Cash basis of accounting
Other revenues
Long-term investments
12. Revenue is recorded when goods or services are delivered
Realization principle
Contribution margin
Net assets released from restriction
Service centers
13. 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.
Basic accounting equation
Investor
Cost
Quick ratio
14. Assets = Liabilities + Net Assets (aka Equity).
Properties and equipment - net
Basic accounting equation
Budget
Service centers
15. Donated assets that have restrictions on their use which will never be removed.
Investment centers
Not-for-profit
Permanently restricted net assets
Fixed assets
16. (non-operating revenues/total operating revenues)- A ratio that reflects how dependent the organization is on non-patient care related net income.
Non-operating ratio
Intermediate Cost Object
Days cash on hand
Net accounts receivable
17. Requiring the patient to pay part of his/her health care bill. These payments are used to prevent over-utilization of services.
Budget
Co-payments
IRR
Basic accounting equation
18. Costs (such as rent - administration - insurance - etc. that are shared by a number of services or departments and cannot easily be broken down to the services attributable to each (surgery - emergency medicine - etc.). Also called joint costs.
Acid test ratio
For-profit
Working capital
Common costs
19. A situation in which if one project is implemented the other(s) will not be.
Service centers
Mutually exclusive projects
MV
Opening inventory
20. 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.
Footnotes
Liabilities
Non-operating income
Accounts receivable
21. 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.
HMO
Administrative profit centers
Revenue rate variance
Liquidity ratios
22. Expenses of the organization incurred in non-health-care related activities.
Non-operating expenses
Net assets released from restriction
Basis of Allocation
Product diversity
23. Assets that have restrictions on their use which will be removed either with the passage of time or the occurrence of some event.
Fixed labor budget
Temporarily restricted net assets
Cost of capital
IRR
24. The costs of a service after taking into account its direct and fair share of allocated costs.
Fully allocated costs
Inflation
Capital
Cash flows from financing activities
25. Organizational units responsible for their own costs that provide administrative support to other organizational units or the organization
Non-operating revenues
Administrative cost centers
Liquidity ratios
Spillover cash flows
26. Decisions regarding the relative amount of debt and equity used to finance the organization's non-current assets.
Asset mix
Capital structure decision
Other revenues
Capital appreciation
27. [Total Liabilities/ Net assets]
Compounding
Cash basis of accounting
Financing mix
Debt to equity
28. 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.
Mail float
Revenue enhancement
Loan amortization schedule
Realization principle
29. How an organization chooses to finance its working capital needs.
Financing mix
Expense budget
Lease
Depreciation
30. [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?
Mutually exclusive projects
Non-operating ratio
Total asset turnover
Coupon rate
31. The elapsed time between when the patient or third-party payor sends the payment and the time the health care provider receives the payment.
Operating expenses
Mail float
G & A expenses
Permanently restricted net assets
32. A statistic used to allocate costs from a cost center based on a cause and effect relationship. For example - a common allocation base to allocate the costs of maintaining medical records is number of visits. See also Cost driver.
Asset Turnover Ratio
Cost avoidance
Allocation base
Financing activities
33. [(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
Investor
Fully allocated costs
Debt service coverage
Excess of revenues over expenses
34. Amounts due to the organization from patients - third parties - and others.
Accounts receivable
Net increase (decrease) in cash and cash equivalents
Line of credit
Certainty
35. A transaction that reduces the risk of an investment.
Hedge
Responsibility center
Mail float
FTE
36. Gross proceeds less the underwriter's fee and other issuance fees.
Cash basis of accounting
Cash budget
Horizontal analysis
Net proceeds from a bond issuance
37. 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?
Bad debt
Statement of cash flows
Capital financing
Prepaid assets
38. Highly liquid current assets such as interest-bearing savings and checking accounts.
Cash basis of accounting
Cash equivalents
Current assets
Capital assets
39. 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.
Investment grade
Depreciation
Capital structure ratios
Donor
40. An entity that gives capital to another entity in expectation of a financial or non-financial return.
Investor
Step Down
Book value
Cash flows from investing activities
41. Organizational units responsible for providing health care related services to clients - patients - or enrollees - and the related costs thereof.
Mission statement
Clinical cost centers
Basic accounting equation
Depreciation
42. 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.
Statement of changes in net assets
Net present value
Fixed labor budget
Net increase (decrease) in cash and cash equivalents
43. 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.
Centralization
Discounted cash flows
Long-term financing
Discount rate
44. The increase in the value of an investment from the time it is purchased until the time it is sold.
Prepaid assets
Capital appreciation
Net working capital
Hedge
45. 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.
Final cost object
Capital assets
Balance sheet
Lease
46. Cash inflows and outflows resulting from financing activities - such as obtaining grants or endowments - or from borrowing or paying back long-term debt.
Time value of money
Average Days Receivable
Asset mix
Cash flows from financing activities
47. Properties and equipment less accumulated depreciation.
Cost
Retained earnings
Line of credit
Properties and equipment - net
48. 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.
Retained earnings
Line of credit
Average payment period
Revenues
49. I) Calculating interest using the compound interest method. 2) Adjusting for the time value of money forward in time to a future value. See also Compound interest method and Discounting.
ABC
Mail float
Compounding
Time value of money
50. The elapsed time between financial statements. Common accounting periods
Current assets
Properties and equipment
Accounting period
Quick ratio