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ACCA Financial Management
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Subjects
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certifications
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business-skills
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acca
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
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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. Assets that have restrictions on their use which will be removed either with the passage of time or the occurrence of some event.
Operating cash flows
Properties and equipment
Temporarily restricted net assets
Opening inventory
2. Bonds that have received a rating ranging from AM to BBB (at S&P) - or Aaa to Bbb (Moody's) - of which the highest are called quality ratings.
Increase in unrestricted net assets
SWOT analysis
Long-term financing
Investment grade
3. The process of distributing service center costs to mission centers - to determine the full cost of each mission center
Prepaid assets
Bonds
Capital appreciation
Allocation
4. A legal obligation to pay the holder of the note or lien.
Expense volume variance
Allowance for uncollectibles
Capital assets
Notes payable
5. Organizational units primarily responsible for ensuring that services are provided to a population in a manner that meets the volume and quality requirements of the organization. Service centers are the most basic type of responsibility centers.
Fixed supplies budget
Fixed asset turnover
Service centers
Book value
6. Expenses of the organization incurred in non-health-care related activities.
Liquidity ratios
Discounted cash flows
Non-operating expenses
Asset mix
7. IA category of non-current assets not intended to be used for operations - but only for capital appreciation and dividends - and that will be held for a period longer than one year.
Basis of Allocation
Long-term investments
Capital assets
Bad debt
8. 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.
Retained earnings
Horizontal analysis
Net working capital
Accumulated depreciation
9. Market value. The price at which something - such as bonds and stocks - could be bought or sold today on the open market.
Fixed asset turnover
Present value of an annuity
MV
Operating cash flows
10. [Total Revenues/ Total Assets]
Footnotes
Perpetuity
Asset Turnover Ratio
Cash budget
11. The budget used to forecast operating expenses.
Expense budget
Discount rate
Other income
Top-down/bottom-up approach
12. The cost of activities that take place to produce the final cost object
Opening inventory
Intermediate Cost Object
Permanently restricted net assets
Volume diversity
13. [Total assets/Net Assets]
Operating budget
Activity Based Costing
Leverage
Common costs
14. A statement intended to guide the organization into the future by identifying the unique attributes of the organization - why it exists - and what it hopes to achieve.
Debt to equity
Investment grade
Mission statement
Cash and cash equivalents
15. The cost of the supplies on hand at the beginning of the year.
Non-operating income
Fixed assets
Current ratio
Opening inventory
16. 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.
Statement of changes in net assets
Net accounts receivable
Breakeven point
Compounding
17. A good or service provided in return for some type of compensation.
Liquidity
Transaction
Parent organization
Fixed assets
18. Amounts due to the organization from patients - third parties - and others.
Accounts receivable
Perpetuity
Mail float
Performance budget
19. Amounts the organization is obligated to pay others - including suppliers and creditors.
Accounts payable
Expansion decisions
HMO
Net working capital
20. The degree to which standards are met.
Billing float
Effectiveness
Accounts receivable
Activity ratios
21. 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.
Footnotes
Capital structure decision
Beginning inventory
Non-operating expenses
22. (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;
Capital appreciation
Return on net assets
Amortization of a loan
Mission Center
23. 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.
Net Assets to Total Assets
Centralization
IRR
Cost object
24. Service center costs are allocated to both mission centers and other service centers
Step Down
Non-regular cash flows
Restricted donation
Fixed supplies budget
25. (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
Inflation
Creditor
Strategic decisions
Tax-exempt bonds
26. 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.
Loan amortization schedule
Excess of revenues over expenses
Statement of cash flows
Billing float
27. A measure of the resources used to generate revenue and/or provide a service. Often used synonymously with costs. See also Costs.
Cash flows from financing activities
Common costs
Expenses
Inflation
28. 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.
Discounted cash flows
Loan amortization schedule
Non-current liabilities
Accounts payable
29. 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.
Mortgage
Working capital
Budget
Cost avoidance
30. General and administrative expenses. Operating expenses that are not contained in the labor or supplies budgets.
Properties and equipment - net
G & A expenses
Interest
Present value of an annuity
31. [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
Hedge
Long-term debt to net assets ratio
Other revenues
Properties and equipment - net
32. The elapsed time between financial statements. Common accounting periods
Income from investments
Accounting period
Allocation base
Service centers
33. An investment that generates an annuity for an indefinite period of time - basically forever.
Mortgage bonds
ROI
Discounting
Perpetuity
34. The method by which to distribute service center costs to mission centers; in general the one that most accurately measures use by the cost centers that receives its services (food service - # of meals - hospital laundry - # of pounds processed)
Cash budget
Basis of Allocation
Creditor
Assets
35. Operating income not reported elsewhere under revenues - gains - and other support.
HMO
Other revenues
Parent organization
Average Days Receivable
36. The system of accounting that recognizes revenues when earned and expenses when resources are used. This method is used by most non-governmental health care organizations. See also Cash basis of accounting.
Net present value
SWOT analysis
Accrual basis of accounting
Capital structure ratios
37. The rate of return required to undertake a project. Also called the hurdle rate or discount rate.
Asset mix
Bonds
Common costs
Cost of capital
38. A contract between a lender and a potential borrower preauthorizing the potential borrower's right to borrow up to a specific amount on request as long as they fulfill the terms and conditions of the contract. Also called a letter of credit.
Total asset turnover
Line of credit
Net accounts receivable
Effectiveness
39. Bonds that hold the health care provider's real property and equipment as security or collateral in case of default.
Opportunity cost
Net working capital
Beginning inventory
Mortgage bonds
40. 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.
Operating income
ROI
Short-term financing
Cost
41. Being subject to sanctions with respect to carrying out responsibilities.
Efficiency
Cost of capital
Statement of changes in net assets
Accountability
42. 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.
Lease
Coupon rate
Discount rate
Accumulated depreciation
43. Cash inflows and outflows resulting from financing activities - such as obtaining grants or endowments - or from borrowing or paying back long-term debt.
Non-operating ratio
Tax-exempt bonds
Cash flows from financing activities
Dividends
44. 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).
Coupon
Fixed supplies budget
Current ratio
Fixed Asset Turnover
45. Decisions regarding the relative amount of debt and equity used to finance the organization's non-current assets.
Inflation
Accrual basis of accounting
Capital structure decision
Liquidity
46. 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
Cost Accounting
Deferred revenues
Capital investment decisions
47. The section of the expense budget that forecasts salary and benefits.
Prepaid assets
Accrual basis of accounting
Financing activities
Fixed labor budget
48. One of the four major financial statements. It explains the changes in net assets from one period to the next on the balance sheet. Also called statement of changes in owners' equity in a for-profit business.
Statement of changes in net assets
Market rate of interest
HMO
Net Assets to Total Assets
49. Operating income plus other income. This is analogous to net income before taxes in for-profit entities.
Program budget
Excess of revenues over expenses
Cash equivalents
Long-term debt - net of current portion
50. Amounts earned by the organization from the provision of service or sale of goods.
Opening inventory
Administrative profit centers
Revenues
Mortgage