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Test your basic knowledge |
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. A catchall category for miscellaneous expenses and losses not included in other categories (telephone - travel - meals - etc.).
Other expenses
Time value of money
Working capital
Current assets
2. Budgets that typically cover two to five years.
Accrued expenses
Multiyear budget
Common costs
Investment centers
3. 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.
Cash basis of accounting
Loan amortization schedule
Accumulated depreciation
ABC
4. 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.
Cost Accounting
Net present value
Discount rate
Properties and equipment - net
5. The sources of funds to finance the non-current assets of the organization. Also the debt and equity of the organization.
Basis of Allocation
Asset mix
Equity financing
Capital
6. 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.
Volume diversity
FV
Collections policies and procedures
Present value of an annuity
7. Setting aside cash to meet unexpected demands - such as unexpected maintenance of a facility or piece of equipment.
Average Days Inventory
Other income
Coupon payment
Precautionary purposes
8. Capital investment decisions designed to increase an organization's strategic position.
Effectiveness
Strategic decisions
Basis of Allocation
Capital budget
9. Demonstrates the ability to pay off long term debt
Capital financing
Investor
Long Term Solvency ratios
Matching principle
10. The amount remaining after subtracting variable costs from revenues. When the organization is not at capacity - it is the "profit" the organization makes on providing each new unit that is available to cover all other costs. Contribution margin may b
Asset Turnover Ratio
Short-term financing
Amortization of a loan
Contribution margin
11. Revenue is recorded when goods or services are delivered
Realization principle
Operating budget
Capital investment decisions
Compounding
12. Future value. What an amount invested today (or a series of payments made over time) will be worth at a given time in the future using the compound interest method. This accounts for the time value of money. See also Present value.
Incremental cash flows
FV
Intermediate Cost Object
Asset Management ratios
13. Financing used expressly for the purchase of non-current assets.
Times interest earned
Strategic financial planning
Prepaid assets
Capital financing
14. [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).
Balance sheet
Fixed Asset Turnover
Asset Turnover Ratio
Net accounts receivable
15. Directly related to the purposes of the organization and the delivery of services
Mission Center
Lien
Book value
Annuity
16. The planning process that identifies the organization's mission and strategy in order to position itself for the future.
Acid test ratio
Revenue enhancement
Strategic planning
Investment centers
17. How an organization chooses to finance its working capital needs.
Financing mix
Leverage
Times interest earned
Long-term debt - net of current portion
18. Organizational units responsible for their own costs that provide administrative support to other organizational units or the organization
Perpetuity
Administrative cost centers
Payback
Net present value
19. The rate of return required to undertake a project. Also called the hurdle rate or discount rate.
Amortization of a loan
Time value of money
Long-term investments
Cost of capital
20. [net assets/total assets)- This ratio reflects the proportion of total assets financed by equity. In for-profit organizations it is called the equity to total asset ratio and is calculated using the formula [owners' equity/total assets).
Return on total assets
Investor
Horizontal analysis
Net assets to total assets
21. What a series of equal payments in the future is worth today taking into account the time value of money.
Program budget
Step-down method
Spillover cash flows
Present value of an annuity
22. Series of payments over time - such as interest paid to bondholders.
Float
Temporarily restricted net assets
Periodic payments
Cost Accounting
23. Organizational unit given the responsibility to carry out one or more tasks and/or achieve one or more outcomes.
Lien
Asset Management ratios
Responsibility center
Market rate of interest
24. 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.
Permanently restricted net assets
Centralization
Opportunity cost
Parent organization
25. [Total assets/Net Assets]
Payback
Leverage
Asset Turnover Ratio
Accrual basis of accounting
26. Stated interest rate on a bond - as promised by the issuer.
Capital structure ratios
Non-current assets
Coupon rate
Average Days Inventory
27. Supplementing traditional sources of revenue with new sources.
Long-term debt - net of current portion
Income from investments
Revenue enhancement
Line-item budget
28. [(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
Ratio analysis
Activity Based Costing
Expense volume variance
Market rate of interest
29. Cash flows that occur solely as a result of undertaking a project. Basically the marginal difference between alternatives.
Coupon payment
Excess of revenues over expenses
Non-operating expenses
Incremental cash flows
30. [(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
Retained earnings
Cash and cash equivalents
Times interest earned
Cost of capital
31. 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?
Ending inventory
Equity financing
Mail float
Statement of cash flows
32. The difference between current assets and current liabilities.
Inflation
Total asset turnover
Accrued expenses
Net working capital
33. General and administrative expenses. Operating expenses that are not contained in the labor or supplies budgets.
Fixed costs
FTE
Cash and cash equivalents
G & A expenses
34. The time between the issuance of the bill and the time funds are available for use by the health care organization. It has two components: mail float and processing float.
Accumulated depreciation
Single/Simple Step
Collection float
Coupon
35. Operating income plus other income. This is analogous to net income before taxes in for-profit entities.
Investor
Fixed Asset Turnover
Basic accounting equation
Excess of revenues over expenses
36. 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.
Long-term investments
Operating margin
Compounding
Capital financing
37. Amounts given to the organization for operating purposes - such as governmental appropriations and unrestricted donations.
Compounding
Basic accounting equation
Other support
Hedge
38. Internal rate of return. The percentage return on an investment. It is the rate of return at which the net present value equals zero. Often used as a comparison to cost of capital.
Accumulated depreciation
IRR
Matching principle
Non-operating income
39. Ratios designed to answer the question: How profitable is the organization?
Common costs
Profitability ratios
Collections policies and procedures
Mission statement
40. 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.
Leverage
Coupon
Discount rate
Cost of goods sold
41. The increase in the value of an investment from the time it is purchased until the time it is sold.
Transaction
Capital appreciation
Cost of capital
Cash flows from operating activities
42. 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.
Indirect costs
Discounted cash flows
Cost avoidance
Breakeven point
43. The amount of inventory on hand at the beginning of an accounting period. See also Ending inventory.
Long Term Solvency ratios
G & A expenses
Beginning inventory
Asset Turnover Ratio
44. Assets minus Liabilities. One of the three major categories on the balance sheet. Traditionally known as stockholders' equity in investor-owned organizations and fund balance in not-for-profit organizations. In not-for-profit health care organization
Expense cost variance
Operating cash flows
Net Assets
Debt service coverage
45. An entity that gives capital to another entity in expectation of a financial or non-financial return.
Assets
Expense cost variance
Non-operating expenses
Investor
46. An entity that temporarily grants the use of money or an asset to another in return for compensation - usually in the form of interest.
Non-operating income
Interest
Mail float
Lender
47. 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.
Transaction
Cost
Common costs
Decentralization
48. Assets that have a physical presence.
Asset Turnover Ratio
Basis of Allocation
Tangible assets
Net accounts receivable
49. The budget that projects the organization's cash inflows and outflows. The bottom line in the cash budget is the amount of cash available at the end of the period.
Cash budget
Ending inventory
Strategic financial planning
FTE
50. 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).
Expansion decisions
Coupon payment
Fixed supplies budget
Final cost object