Test your basic knowledge |

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. I) Organizations that have a special designation because they provide goods or services that result in needed community benefit. In turn - such organizations are not required to pay most taxes. 2) The designation of an organization as one that is not






2. Operating income plus other income. This is analogous to net income before taxes in for-profit entities.






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






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






5. Expenses that have been incurred - but not yet paid.






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






7. 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.






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






9. [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).






10. An investment that generates an annuity for an indefinite period of time - basically forever.






11. [(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






12. Stated interest rate on a bond - as promised by the issuer.






13. Cash inflows and outflows resulting from financing activities - such as obtaining grants or endowments - or from borrowing or paying back long-term debt.






14. The budget that projects the organization's cash inflows and outflows. The bottom line in the cash budget is the amount of cash available at the end of the period.






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






16. The ability of an organization to find new ways to operate that obviate the need for certain classes of costs - such as doing procedures on an outpatient rather than inpatient basis.






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






18. An organization's financial obligations that are to be paid within one year.






19. Cash flows that have been adjusted to their present value to account for the cost of capital (over time) and the time value of money.






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






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






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






23. [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).






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






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






26. An organization whose profits can be distributed outside the organization and must pay taxes. Also called investor-owned organizations.






27. {current liabilities/[(total expenses






28. The amount the holder of the coupon receives periodically - usually semiannually. Over the year - it equals the coupon rate times the face value of the bond.






29. 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.






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






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






32. 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.






33. 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






34. The budget that forecasts the operating and - in some cases - the non- operating revenues that will be earned during the budget period.






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






36. Service center costs are allocated to both mission centers and other service centers






37. 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.






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






39. Traces indirect costs to activity that uses them. Overhead collected in pools and distributed to cost object by cost drivers.






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






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






42. [total revenues/net plant & equipment]- This ratio measures the number of dollars generated for each dollar invested in an organization's plant and equipment.






43. A situation in which if one project is implemented the other(s) will not be.






44. The difference between current assets and current liabilities.






45. Cash flows that occur solely as a result of undertaking a project. Basically the marginal difference between alternatives.






46. Each service center






47. (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;






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






49. 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.






50. The bottom line in the statement of operations. It includes such items as operating and non-operating income - contributions of long-lived assets - transfers to parent - and extraordinary items.