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ACCA Financial Management

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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 revenue and expense budgets of an organization.

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

3. The balance sheet category that includes actual money on hand as well as money equivalents - such as savings and checking accounts. It excludes cash restricted as to its use for something other than current operations.

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

6. The absence of risk in an investment.

7. Ratios that answer the question: How well is the organization positioned to meet its short-term obligations?

8. When products are manufactured in batches in different sizes - and overhead activities are affected by the size of the batch being produced

9. Costs that are traced to a cost object. See also Indirect costs and Cost object.

10. {current liabilities/[(total expenses

11. The method of capital budgeting that compares the cash flows resulting from continuing with the existing alternative to those that would result if the equipment were replaced.

12. 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.

13. Amounts due to the organization from patients - third parties - and others.

14. 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.

15. The central document of the planning/control cycle. It identifies revenues and resources that will be needed by an organization to achieve its goals and objectives.

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

17. 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.

18. The difference between what was planned (budgeted) and what was achieved (actual).

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

20. (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;

21. The degree to which standards are met.

22. The section of the statement of cash flows that reports the total change in cash and cash equivalents over the accounting period.

23. The system of accounting that recognizes revenues when cash is received and expenses when cash is paid out. See also Accrual basis of accounting.

24. That point at which total revenues equal total costs. It is described by the equation: (price x volume) = fixed costs + (variable cost per unit x volume).

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

26. The cost of the supplies on hand at the beginning of the year.

27. 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.

28. A balance sheet account that estimates the total amount of customer accounts receivable that will not be collected. It is also called allowance for bad debts and allowance for doubtful accounts.

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

30. An estimate/measure of how much a tangible asset (such as plant or equipment) has been "used up" during an accounting period. It is an expense that does not require any cash outflow under the accrual basis of accounting. See also Accumulated deprecia

31. 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.

32. Costs that stay the same in total over the relevant range as volume increases - but that change inversely on a per unit basis.

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

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

36. The amount of supplies used to provide a service or good.

37. The degree of dispersion of responsibility within an organization. See also Centralization.

38. 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.

39. The purchase of assets with contributed and internally generated funds. See also Debt financing.

40. [long-term debt/net assets]- A measure of the proportion of an organization's assets that are financed by debt as opposed to equity. In for-profit organizations - it is called the long-term debt to equity ratio and is calculated using the formula [lo

41. 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.

42. [operating income/total operating revenues]- The proportion of profit remaining after subtracting total operating expenses from operating revenues.

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. Tools used to increase the amount of cash available to the organization. The objective of billing - credit - and collection policies is to accelerate cash receipts; the objective of cash disbursement policies is to slow down cash outflows.

45. 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.

46. [Total Liabilities/ Net assets]

47. A donation that has conditions which must be satisfied. See also Temporarily restricted net assets.

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

49. Assets that provide service for a period exceeding one year. Sometimes referred to as long-term assets.

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