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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. A borrower's assets on which a lender has legal claim if a borrower defaults on a loan.






2. The activities of an organization directly related to its main line of business.






3. Assets that have restrictions on their use which will be removed either with the passage of time or the occurrence of some event.






4. Opposite of the authoritarian approach. The roles and responsibilities of the budgeting process are diffused throughout the organization. Often called the participatory approach.






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






6. Each service center






7. General and administrative expenses. Operating expenses that are not contained in the labor or supplies budgets.






8. [(cash + marketable securities + net accounts receivable)/current liabilities)- A measure of the organization's liquidity.






9. 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






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






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






12. An estimate/measure of how much a tangible asset (such as plant or equipment) has been "used up" during an accounting period. It is an expense that does not require any cash outflow under the accrual basis of accounting. See also Accumulated deprecia






13. {[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).






14. Capital investment decisions designed to increase the operational capability of a health care organization.






15. The process of distributing service center costs to mission centers - to determine the full cost of each mission center






16. The revenue and expense budgets of an organization.






17. The expenses incurred from an organization's operating activities.






18. Expenses of the organization incurred in non-health-care related activities.






19. 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.






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






21. Requiring the patient to pay part of his/her health care bill. These payments are used to prevent over-utilization of services.






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






23. 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






24. A measure of the resources used to generate revenue and/or provide a service. Often used synonymously with costs. See also Costs.






25. The revenue that the organization has a right to collect. It is computed as: gross patient service revenues – contractual allowance and charity care.






26. 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.






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






28. A transaction that reduces the risk of an investment.






29. Directly related to the purposes of the organization and the delivery of services






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






31. The method of capital budgeting that compares the cash flows resulting from continuing with the existing alternative to those that would result if the equipment were replaced.






32. Being subject to sanctions with respect to carrying out responsibilities.






33. Supplementing traditional sources of revenue with new sources.






34. Cash inflows and outflows for the organization resulting from investing activities such as purchasing and selling investments or investing in itself by purchasing or selling non-current assets. It also includes transfers to and from the parent corpor






35. Ratios designed to answer the question: How profitable is the organization?






36. A catchall category for miscellaneous expenses and losses not included in other categories (telephone - travel - meals - etc.).






37. I) Measuring inputs against outputs. 2) The cost of service per unit rendered.






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.






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






40. [(actual cost per unit -budgeted cost per unit) x actual volume).- The difference between the variable expenses that would have been expected at the actual volume and those actually incurred.






41. Organizational units responsible for providing administrative support at a profit to other organizational units or to the organization as a whole and/or raising funds externally.






42. Time delays in the billing and collection process. There are four categories of float: billing - collection - transit - and disbursement. An organization's goal is to optimize float for incoming revenues and outgoing bills.






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






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






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






46. 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.






47. When products are manufactured in batches in different sizes - and overhead activities are affected by the size of the batch being produced






48. The delay between providing the service and getting the bill to the patient or third party. There are two aspects of billing float: assembling the bill and delivering the bill to the patient or third-party payor.






49. 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.






50. [(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