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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. The process of distributing service center costs to mission centers - to determine the full cost of each mission center
Basic accounting equation
Allocation
Book value
Current liabilities
2. The degree of dispersion of responsibility within an organization. See also Centralization.
Decentralization
Net increase (decrease) in cash and cash equivalents
Tangible assets
Asset Turnover Ratio
3. Ratios that measure how the organization's assets are financed and/or whether the organization can take on new debt.
Capital structure ratios
Cost avoidance
Discount rate
Efficiency
4. An entity that gives capital to another entity in expectation of a financial or non-financial return.
Coupon payment
Fixed costs
Fixed Asset Turnover
Investor
5. Organizational unit given the responsibility to carry out one or more tasks and/or achieve one or more outcomes.
Liquidity ratios
Quick ratio
Responsibility center
Cash flows from financing activities
6. The activities of an organization directly related to its main line of business.
Operating activities
Cost centers
Intermediate Cost Object
Ratio analysis
7. [Net Assets/Total Assets]. This ratio reflects the proportion of total assets financed by equity.
Other income
Depreciation
Net Assets to Total Assets
Performance budget
8. [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).
Collection float
Accounts payable
Service centers
Fixed Asset Turnover
9. An amount owed to the organization that will not be paid. Charity care is not considered a bad debt since nothing is owed to the organization for services provided.
Net patient service revenue
Ratio analysis
Bad debt
Other support
10. [Total Revenues/ Total Assets]
Effectiveness
Ending inventory
Asset Turnover Ratio
Periodic payments
11. The amount of inventory on hand at the beginning of an accounting period. See also Ending inventory.
Book value
Beginning inventory
Budget variance
Indirect costs
12. Traces indirect costs to activity that uses them. Overhead collected in pools and distributed to cost object by cost drivers.
Investment centers
Multiyear budget
Activity Based Costing
Notes payable
13. [operating income/total operating revenues]- The proportion of profit remaining after subtracting total operating expenses from operating revenues.
Capital budget
Performance budget
Operating margin
Mission statement
14. process of measuring the resources (costs) used to produce results.
Beginning inventory
Service centers
Cost Accounting
Transaction
15. Amounts due to the organization from patients - third parties - and others.
Basic accounting equation
Accounts receivable
Hedge
Co-payments
16. Setting aside cash to meet unexpected demands - such as unexpected maintenance of a facility or piece of equipment.
Cost of capital
Accounts receivable
Common costs
Precautionary purposes
17. 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.
Non-current assets
Cash flows from operating activities
Operating margin
Horizontal analysis
18. Operating income not reported elsewhere under revenues - gains - and other support.
Common costs
Other revenues
Statement of operations
Top-down budgeting
19. Cash inflows and outflows resulting from financing activities - such as obtaining grants or endowments - or from borrowing or paying back long-term debt.
Profitability ratios
Creditor
Direct costs
Cash flows from financing activities
20. [(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
Horizontal analysis
Times interest earned
Cash flows from financing activities
Total revenue
21. Amounts given to the organization for operating purposes - such as governmental appropriations and unrestricted donations.
Responsibility center
Other support
Payback
Current liabilities
22. 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.
Co-payments
IRR
ROI
Asset Turnover Ratio
23. (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;
Return on net assets
ROI
Long-term investments
Net increase (decrease) in cash and cash equivalents
24. [Net Accounts Receivable/(Revenue/356)]
Activity Based Costing
Average Days Receivable
Cash basis of accounting
Product diversity
25. The budget that forecasts the operating and - in some cases - the non- operating revenues that will be earned during the budget period.
Cash budget
Revenue budget
Discount rate
Long Term Solvency ratios
26. The ease and speed with which an asset can be turned into cash.
G & A expenses
Fixed Asset Turnover
Revenue budget
Liquidity
27. Cash inflows and outflows for the organization resulting from investing activities such as purchasing and selling investments or investing in itself by purchasing or selling non-current assets. It also includes transfers to and from the parent corpor
Multiyear budget
Leverage
Budget
Cash flows from investing activities
28. {current liabilities/[(total expenses
Short-term financing
Discounted cash flows
Average payment period
Fixed assets
29. Donated assets that have restrictions on their use which will never be removed.
Coupon payment
Parent organization
Net present value
Permanently restricted net assets
30. The rise in an economy's general level of prices.
Not-for-profit
Allocation
Inflation
ABC
31. A measure of the income earned from operating activities. It is calculated as: unrestricted revenues - gains - and other support -expenses and losses.
Top-down/bottom-up approach
Financing activities
Operating income
Notes payable
32. The amount expected to be collected from payors. It is calculated as: gross accounts receivable – discounts and allowances – allowance for un-collectibles.
Other expenses
Excess of revenues over expenses
Total revenue
Net accounts receivable
33. 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.
Line of credit
Statement of changes in net assets
Beginning inventory
Discount rate
34. A method by which the organization develops its strategies and budgets to meet future financial targets.
Cash flows from financing activities
Administrative profit centers
Strategic financial planning
Expenses
35. Organizational units responsible for providing services and controlling their costs. There are two major types: clinical cost centers and administrative cost centers.
Financing activities
Cash flows from operating activities
Lease
Cost centers
36. 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)
Basis of Allocation
Controlling activities
Decentralization
SWOT analysis
37. What a series of equal payments in the future is worth today taking into account the time value of money.
IRR
Billing - collections - and disbursement policies and procedures
Hedge
Present value of an annuity
38. 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
Acid test ratio
Not-for-profit
Restricted donation
Amortization of a loan
39. Each service center
Single/Simple Step
Fixed asset turnover
IRR
Capital financing
40. Capital investment decisions designed to increase the operational capability of a health care organization.
Expansion decisions
Net Assets to Total Assets
Donation
Expense volume variance
41. The budget format that lists revenues and expenses by category - such as labor - travel - and supplies. Categories are sometimes broken down into sub-categories. See also Performance budget and Program budget.
Not-for-profit
Common costs
Line-item budget
Operating cash flows
42. An entity that owns other companies.
Parent organization
Financing activities
Statement of cash flows
Indirect costs
43. The process of adjusting for the time value of money backward in time to present value. See also Compounding.
Long Term Solvency ratios
Current liabilities
Discounting
Multiyear budget
44. 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.
Billing float
Accrual basis of accounting
Program budget
Collateral
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
Investment centers
Operating margin
Tax-exempt bonds
Traditional profit centers
46. The planning process that identifies the organization's mission and strategy in order to position itself for the future.
Cash and cash equivalents
Strategic planning
Periodic payments
Cash equivalents
47. An entity that temporarily grants the use of money or an asset to another in return for compensation - usually in the form of interest.
Lender
Book value
Precautionary purposes
Basis of Allocation
48. Decisions regarding the relative amount of debt and equity used to finance the organization's non-current assets.
Common costs
Capital structure decision
Controlling activities
Parent organization
49. The revenue that the organization has a right to collect. It is computed as: gross patient service revenues – contractual allowance and charity care.
Allowance for uncollectibles
Top-down/bottom-up approach
Net patient service revenue
Collection float
50. The cost of a capital asset (i.e. building or equipment) minus accumulated depreciation.
Net present value
Other expenses
Book value
Fixed labor budget