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ACCA Financial Management

Instructions:
  • Answer 50 questions in 15 minutes.
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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 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.






2. The rate of return required to undertake a project. Also called the hurdle rate or discount rate.






3. Full-time equivalent employees. Two half-time employees equal one FTE.






4. A measure of the income earned from operating activities. It is calculated as: unrestricted revenues - gains - and other support -expenses and losses.






5. A statement intended to guide the organization into the future by identifying the unique attributes of the organization - why it exists - and what it hopes to achieve.






6. What a series of equal payments in the future is worth today taking into account the time value of money.






7. 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.






8. Price times total quantity.






9. 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.






10. Organizational units responsible for providing services and controlling their costs. There are two major types: clinical cost centers and administrative cost centers.






11. [Total Liabilities/ Net assets]






12. 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.






13. process of measuring the resources (costs) used to produce results.






14. 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.






15. [Net Accounts Receivable/(Revenue/356)]






16. Amounts the organization is obligated to pay others - including suppliers and creditors.






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






18. Organizational units primarily responsible for ensuring that services are provided to a population in a manner that meets the volume and quality requirements of the organization. Service centers are the most basic type of responsibility centers.






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






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






21. Properties and equipment less accumulated depreciation.






22. {current liabilities/[(total expenses






23. Time delays in the billing and collection process. There are four categories of float: billing - collection - transit - and disbursement. An organization's goal is to optimize float for incoming revenues and outgoing bills.






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






25. Generally - assets that will be used or consumed within one year. Some organizations use a period of less than one year.






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






27. 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.






28. A form of long-term financing whereby the issuer receives cash and in return issues a note called a bond. By issuing the bond - the issuer agrees to make principal and/or interest payments on specific dates to the holders of the bond.






29. Proceeds lost by foregoing other opportunities.






30. 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.






31. Private entity or individual who makes a donation






32. Return on investment. The percentage gain or loss experienced from an investment.






33. 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.






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






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






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






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






38. 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.






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






40. A technique to evaluate an organization's strengths - weaknesses - opportunities - and threats. Also called a WOTS-up analysis.






41. Budgets that typically cover two to five years.






42. Any product - service - customer - contract - project - process or other work unit for which a separate cost measurement is desired.






43. 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.






44. Monies received that have not yet been earned. One of the most common deferred revenues is the receipt of capitation on the basis of per member per month (PMPM).






45. Each service center






46. A good or service provided in return for some type of compensation.






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






48. 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.






49. A method to evaluate the feasibility of an investment by determining how long it would take until the initial investment is recovered. This method does not account for the time value of money.






50. An approach to analyzing the financial condition of an organization based on ratios calculated from line items found in the financial statements. There are four major categories of ratios: liquidity - profitability - capitalization - and activity.