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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. A catchall category for miscellaneous expenses and losses not included in other categories (telephone - travel - meals - etc.).






2. Budgets that typically cover two to five years.






3. 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.






4. 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.






5. The sources of funds to finance the non-current assets of the organization. Also the debt and equity of the organization.






6. Policies and procedures that address when and how to collect revenues - such as paying at time of service - sending accounts to collection agencies - and writing off accounts as bad debt.






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






8. Capital investment decisions designed to increase an organization's strategic position.






9. Demonstrates the ability to pay off long term debt






10. 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






11. Revenue is recorded when goods or services are delivered






12. Future value. What an amount invested today (or a series of payments made over time) will be worth at a given time in the future using the compound interest method. This accounts for the time value of money. See also Present value.






13. Financing used expressly for the purchase of non-current assets.






14. [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).






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






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






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






18. Organizational units responsible for their own costs that provide administrative support to other organizational units or the organization






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






20. [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).






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






22. Series of payments over time - such as interest paid to bondholders.






23. Organizational unit given the responsibility to carry out one or more tasks and/or achieve one or more outcomes.






24. 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.






25. [Total assets/Net Assets]






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






27. Supplementing traditional sources of revenue with new sources.






28. [(actual volume -budgeted volume) x budgeted cost per unit).- The portion of total variance that is due to actual volume being either higher or lower than budgeted volume. It is the difference between the expenses forecast in the original budget and






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






30. [(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






31. 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?






32. The difference between current assets and current liabilities.






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






34. 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.






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






36. 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.






37. Amounts given to the organization for operating purposes - such as governmental appropriations and unrestricted donations.






38. 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.






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






40. 1) The returns that must be generated on a project to compensate the organization for its risk. 2) The returns the organization is foregoing by investing its money in one project as opposed to an alternative of similar risk. See also Cost of capital.






41. The increase in the value of an investment from the time it is purchased until the time it is sold.






42. 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.






43. The amount of inventory on hand at the beginning of an accounting period. See also Ending inventory.






44. Assets minus Liabilities. One of the three major categories on the balance sheet. Traditionally known as stockholders' equity in investor-owned organizations and fund balance in not-for-profit organizations. In not-for-profit health care organization






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






46. An entity that temporarily grants the use of money or an asset to another in return for compensation - usually in the form of interest.






47. 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.






48. Assets that have a physical presence.






49. 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.






50. The section of the expense budget that forecasts the cost of those supplies that will not vary as a direct result of changes in the amount of services provided (such as administrative office supplies).