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Test your basic knowledge |
ACCA Financial Management
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Study First
Subjects
:
certifications
,
business-skills
,
acca
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.
Net working capital
Donation
Total revenue
Times interest earned
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.
Discount rate
Statement of changes in net assets
Return on net assets
Capital financing
3. A category of income that includes unrestricted interest - dividends - and gains from the sale of unrestricted investments.
Ending inventory
Income from investments
Permanently restricted net assets
Statement of operations
4. Ratios that measure how efficiently an organization is using its assets to produce revenues.
MV
Activity ratios
Capital structure ratios
Strategic financial planning
5. Non-operating income.
Revenue budget
Spillover cash flows
Statement of cash flows
Other 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.
Notes payable
Footnotes
Equity financing
Accrued expenses
7. The increase in the value of an investment from the time it is purchased until the time it is sold.
Expense volume variance
Lender
Capital appreciation
FTE
8. A good or service provided in return for some type of compensation.
Liabilities
Expansion decisions
Operating activities
Transaction
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.
Basis of Allocation
Allowance for uncollectibles
Billing - collections - and disbursement policies and procedures
Current ratio
10. Directly related to the purposes of the organization and the delivery of services
Strategic planning
Retained earnings
Mission Center
Bonds
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.
Mail float
Long-term debt to net assets ratio
Fixed assets
Cost
12. Financing that will be paid back in less than one year.
Short-term financing
Net working capital
Lender
Footnotes
13. A security whose interest rate does not change during the lifetime of the bond.
Investment grade
Fixed (interest) rate debt
Expense cost variance
Fixed supplies budget
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.
ABC
Annuity
Net working capital
Interest
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
Long-term debt to net assets ratio
Amortization of a loan
Net working capital
Ending inventory
16. A benefit paid for in advance (rent - insurance - etc.). Also called prepaid expense.
Average payment period
Prepaid assets
Mortgage
Cost Accounting
17. The percentage of each asset relative to total assets.
Spillover cash flows
Accounts payable
Asset mix
Fixed Asset Turnover
18. Proceeds lost by foregoing other opportunities.
Lien
Strategic financial planning
Opportunity cost
Long-term debt - net of current portion
19. An organization whose profits can be distributed outside the organization and must pay taxes. Also called investor-owned organizations.
Net Assets
For-profit
Other income
Volume diversity
20. A borrower's assets on which a lender has legal claim if a borrower defaults on a loan.
Excess of revenues over expenses
Collateral
Profit margin
Traditional profit centers
21. The process of distributing service center costs to mission centers - to determine the full cost of each mission center
Annuity
Allocation
Billing float
For-profit
22. Decisions regarding the acquisition of capital assets. The capital investment decision should be separate from the decision on how to finance capital assets.
Asset Management ratios
Permanently restricted net assets
Liquidity ratios
Capital investment decisions
23. A budget in which line items are presented by program.
Non-operating revenues
Operating activities
Matching principle
Program budget
24. Organizational units primarily responsible for providing services and earning a profit based on the health care services provided.
Capital structure ratios
Traditional profit centers
Revenues
Bonds
25. The amount of inventory on hand at the beginning of an accounting period. See also Ending inventory.
Performance budget
Transaction
Beginning inventory
Acid test ratio
26. Demonstrates the ability to pay off long term debt
Matching principle
Long Term Solvency ratios
Cost Accounting
Coupon payment
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
Not-for-profit
Net assets to total assets
Financing activities
Collections policies and procedures
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.
Cash flows from operating activities
Times interest earned
Cash basis of accounting
Accumulated depreciation
29. The current traded rate for similar risk securities.
Intermediate Cost Object
Discounting
Disbursement float
Market rate of interest
30. Financial obligations that will be paid off over a time period longer than one year
Debt service coverage
Non-current liabilities
Precautionary purposes
Excess of revenues over expenses
31. Costs that stay the same in total over the relevant range as volume increases - but that change inversely on a per unit basis.
Hedge
Fixed costs
Not-for-profit
FV
32. Cash inflows and outflows resulting from financing activities - such as obtaining grants or endowments - or from borrowing or paying back long-term debt.
Cash flows from financing activities
Amortization of a loan
Discounting
Top-down/bottom-up approach
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
Top-down budgeting
Ratio analysis
Notes payable
Fixed assets
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;
Return on net assets
Expenses
Single/Simple Step
Present value of an annuity
35. An entity that gives capital to another entity in expectation of a financial or non-financial return.
Investor
Administrative profit centers
Line of credit
Capital structure ratios
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
Permanently restricted net assets
Expense volume variance
Coupon rate
Liabilities
37. The amount of supplies used to provide a service or good.
Cost of goods sold
Working capital
Strategic planning
Operating margin
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.
Horizontal analysis
Mortgage bonds
Properties and equipment
Amortization of a loan
39. Operating income not reported elsewhere under revenues - gains - and other support.
Other revenues
Inflation
Expenses
Breakeven point
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.
Cash budget
Cash basis of accounting
Tax-exempt bonds
Long-term investments
41. The revenue and expense budgets of an organization.
Profit margin
Operating budget
Compounding
Cash flows from investing activities
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.
Issuer
Efficiency
Billing - collections - and disbursement policies and procedures
Net working capital
43. Price times total quantity.
Leverage
Collections policies and procedures
Total revenue
Cost centers
44. Agencies that assess the "credit worthiness" of an organization. The two major rating agencies are Moody's and Standard & Poor.
Decentralization
Fixed asset turnover
Bond rating agency
Performance measure
45. An organization's financial obligations that are to be paid within one year.
Liquidity
Current liabilities
Strategic planning
Effectiveness
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
Administrative cost centers
Tax-exempt bonds
Top-down/bottom-up approach
Working capital
47. The resources owned by the organization. It is one of the three major categories on the balance sheet.
Assets
Base Budget
Administrative profit centers
Other income
48. Operating income plus other income. This is analogous to net income before taxes in for-profit entities.
Liabilities
Leverage
Excess of revenues over expenses
Accumulated depreciation
49. Financial and non-financial standards against which organizational performance is measured.
Operating cash flows
Equity financing
Performance measure
Cash flows from financing activities
50. Recording expenses associated with making revenue at the same time as revenues are recognized
Net Assets to Total Assets
Short-term financing
Matching principle
Long Term Solvency ratios