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






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.






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






4. A legal obligation to pay the holder of the note or lien.






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.






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






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.






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.






9. Market value. The price at which something - such as bonds and stocks - could be bought or sold today on the open market.






10. [Total Revenues/ Total Assets]






11. The budget used to forecast operating expenses.






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






13. [Total assets/Net Assets]






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.






15. The cost of the supplies on hand at the beginning of the year.






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.






17. A good or service provided in return for some type of compensation.






18. Amounts due to the organization from patients - third parties - and others.






19. Amounts the organization is obligated to pay others - including suppliers and creditors.






20. The degree to which standards are met.






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.






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;






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.






24. Service center costs are allocated to both mission centers and other service centers






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






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.






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






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.






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.






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






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






32. The elapsed time between financial statements. Common accounting periods






33. An investment that generates an annuity for an indefinite period of time - basically forever.






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)






35. Operating income not reported elsewhere under revenues - gains - and other support.






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.






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






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.






39. Bonds that hold the health care provider's real property and equipment as security or collateral in case of default.






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.






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






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.






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






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).






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






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






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






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.






49. Operating income plus other income. This is analogous to net income before taxes in for-profit entities.






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