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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 revenue and expense budgets of an organization.






2. 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)






3. Debt to be paid off in a period longer than one year.






4. 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.






5. The budget used to forecast operating expenses.






6. Organizational units responsible for their own costs that provide administrative support to other organizational units or the organization






7. The absence of risk in an investment.






8. Revenues of the organization earned in non-healthcare related activities.






9. The amount expected to be collected from payors. It is calculated as: gross accounts receivable – discounts and allowances – allowance for un-collectibles.






10. [(excess of revenues over expenses + interest expense)/interest expense].- This ratio enables creditors and lenders to evaluate an organization's ability to generate earnings necessary to meet interest expense requirements. In for-profit organization






11. 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).






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. Policies and procedures that address when and how to collect revenues - such as paying at time of service - sending accounts to collection agencies - and writing off accounts as bad debt.






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






15. Donated assets that have restrictions on their use which will never be removed.






16. Full-time equivalent employees. Two half-time employees equal one FTE.






17. Organizational unit given the responsibility to carry out one or more tasks and/or achieve one or more outcomes.






18. Literally non-movable assets. Generally used to refer to buildings and equipment.






19. Irregular cash flows - typically occurring at the end of the life of a project.






20. The unit of service which we wish to know the cost for (hospital admission - classroom hour - course - etc.)






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






22. Any product - service - customer - contract - project - process or other work unit for which a separate cost measurement is desired.






23. 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.






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






25. 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.






26. 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.






27. Gross proceeds less the underwriter's fee and other issuance fees.






28. The rate of return required to undertake a project. Also called the hurdle rate or discount rate.






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






30. [Total assets/Net Assets]






31. 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.






32. Cash flows that occur solely as a result of undertaking a project. Basically the marginal difference between alternatives.






33. The cost of activities that take place to produce the final cost object






34. 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.






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






36. Costs (such as rent - administration - insurance - etc. that are shared by a number of services or departments and cannot easily be broken down to the services attributable to each (surgery - emergency medicine - etc.). Also called joint costs.






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






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






39. 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.






40. Current assets. Net working capital equals current assets –current liabilities.






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






42. A budget which presents not only line items and programs but also the performance goals that each program can be expected to attain. See also Line item budget and Program budget.






43. The income (operating revenues -operating expenses) earned in non-health-care related activities.






44. [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?






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






46. The amount of the total revenue variance that occurs because the actual average rate charged varies from that originally budgeted. It can be calculated using the formula: (actual rate -budgeted rate) x actual volume.






47. [Total Liabilities/ Net assets]






48. Previously restricted assets no longer restricted because the terms of the restriction have been met.






49. Costs not traced to a cost object - but that must eventually be allocated across cost objects. See also Direct costs.






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