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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. Portion of the profits the organization keeps in-house to use in support of its mission.






2. (excess of revenues over expenses/total assets)- A measure of how much profit is earned for each dollar invested in assets. In for-profit organizations it is called return on assets and is calculated as: net income/assets.






3. Amounts earned by the organization from the provision of service or sale of goods.






4. 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.






5. An entity that owns other companies.






6. The section of the expense budget that forecasts salary and benefits.






7. [Total assets/Net Assets]






8. 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?






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






10. The process of adjusting for the time value of money backward in time to present value. See also Compounding.






11. The cost of a capital asset (i.e. building or equipment) minus accumulated depreciation.






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






13. [(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






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






15. 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.






16. {[cash + marketable securities)/[(operating expenses -depreciation)/ 365].- A ratio that indicates the number of days' worth of expenses an organization can cover with its most liquid assets (cash and marketable securities).






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






18. Assets that have a physical presence.






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






20. I) The cost to borrow money. It can be expressed in dollars or as a percentage. 2) Payment to creditors for the use of money on credit.






21. [total revenues/total assets].- This ratio measures the overall efficiency of the organization's assets to produce revenue. It answers the question: For every dollar in assets - how many dollars of revenue are being generated?






22. 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.






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






24. The costs of a service after taking into account its direct and fair share of allocated costs.






25. The category of assets summarizing the amount of the major capital investments of the facility in plant - property - and equipment (PP&E). Plant means buildings - property is land - and equipment includes a wide variety of durable items from beds to






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






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






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






29. Decisions regarding the relative amount of debt and equity used to finance the organization's non-current assets.






30. Properties and equipment less accumulated depreciation.






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






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






33. Funds provided by a private entity or individual without the requirement of repayment. Donations can either be restricted or unrestricted.






34. 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.






35. 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.






36. 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.






37. A contract in which the lessee (user) agrees to pay the leassor (owner) a specific amount over a period of time for the use of an asset.






38. The revenue and expense budgets of an organization.






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






40. [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).






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






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






43. The budget that forecasts the operating and - in some cases - the non- operating revenues that will be earned during the budget period.






44. Activity-based costing. A method to determine the costs of a service - product - or customer by tracing the resources consumed. ABC focuses on: I) controlling as well as calculating costs - 2) tracing as opposed to allocating costs - and 3) the impor






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






47. Current year budget projected for the coming fiscal year assumes no program changes and adjust for price - workload - annualizations






48. Responsibility centers responsible for making a certain return on investments.






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






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