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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. The difference between current assets and current liabilities.






2. 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.






3. A category of income that includes unrestricted interest - dividends - and gains from the sale of unrestricted investments.






4. Ratios that measure how efficiently an organization is using its assets to produce revenues.






5. Non-operating income.






6. The bottom area of the financial statements that contains key information not available in the body of the statements - such as how charity is determined - the composition of investments - which assets are restricted - and the depreciation method.






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






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






9. [current assets/current liabilities].- This liquidity ratio measures the proportion of all current assets to all current liabilities to determine how easily current debt can be paid off. It is one of the most commonly used ratios.






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






11. 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.






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






13. A security whose interest rate does not change during the lifetime of the bond.






14. A series of equal cash flows made or received at regular time intervals. Ordinary annuities occur at the end of each period whereas annuities due occur at the beginning of each period.






15. The gradual process of paying off debt through a long series of equal periodic payments. Each payment covers a portion of the principal plus current interest. The periodic payments are equal over the lifetime of the loan - but the proportion going to






16. A benefit paid for in advance (rent - insurance - etc.). Also called prepaid expense.






17. The percentage of each asset relative to total assets.






18. Proceeds lost by foregoing other opportunities.






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






20. A borrower's assets on which a lender has legal claim if a borrower defaults on a loan.






21. The process of distributing service center costs to mission centers - to determine the full cost of each mission center






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






23. A budget in which line items are presented by program.






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






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






26. Demonstrates the ability to pay off long term debt






27. 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






28. The cumulative amount of depreciation recognized on an asset since its purchase. An asset's book value is equal to its purchase price less the amount of accumulated depreciation.






29. The current traded rate for similar risk securities.






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






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






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






33. That process of budgeting where the environmental assessment and planning of future activities are largely decided upon by a few individuals - and the budget is essentially dictated to the rest of the organization. Often called authoritarian approach






34. (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;






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






36. [(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






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






38. 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.






39. Operating income not reported elsewhere under revenues - gains - and other support.






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






41. The revenue and expense budgets of an organization.






42. 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.






43. Price times total quantity.






44. Agencies that assess the "credit worthiness" of an organization. The two major rating agencies are Moody's and Standard & Poor.






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






46. (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






47. The resources owned by the organization. It is one of the three major categories on the balance sheet.






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






49. Financial and non-financial standards against which organizational performance is measured.






50. Recording expenses associated with making revenue at the same time as revenues are recognized