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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 legal obligation to pay the holder of the note or lien.
Excess of revenues over expenses
Notes payable
Efficiency
Non-operating ratio
2. [Net Assets/Total Assets]. This ratio reflects the proportion of total assets financed by equity.
Revenue rate variance
Net Assets to Total Assets
Short-term financing
Book value
3. A transaction that reduces the risk of an investment.
Matching principle
Hedge
Profit margin
Activity ratios
4. The total amount of multiyear debt due in future years.
Revenue budget
Current ratio
Long-term debt - net of current portion
Transaction
5. 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.
Billing - collections - and disbursement policies and procedures
Cost object
Net accounts receivable
Float
6. Service center costs are allocated to both mission centers and other service centers
Step Down
Billing - collections - and disbursement policies and procedures
Cash basis of accounting
Excess of revenues over expenses
7. Assets = Liabilities + Net Assets (aka Equity).
ABC
Mutually exclusive projects
Long-term debt - net of current portion
Basic accounting equation
8. I) The cost to borrow money. It can be expressed in dollars or as a percentage. 2) Payment to creditors for the use of money on credit.
Allocation
Budget
Interest
Performance measure
9. 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.
Statement of changes in net assets
Billing - collections - and disbursement policies and procedures
Cash flows from investing activities
Asset Turnover Ratio
10. The section of the statement of cash flows that reports the total change in cash and cash equivalents over the accounting period.
Step Down
Loan amortization schedule
Net increase (decrease) in cash and cash equivalents
Non-regular cash flows
11. Cash inflows and outflows resulting from financing activities - such as obtaining grants or endowments - or from borrowing or paying back long-term debt.
Cash flows from financing activities
Net accounts receivable
Investment grade
Asset mix
12. {[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).
Days cash on hand
Strategic decisions
Lender
Responsibility center
13. Amounts the organization is obligated to pay others - including suppliers and creditors.
Performance budget
Accounts payable
Volume diversity
HMO
14. Budgets that typically cover two to five years.
Multiyear budget
Responsibility center
Collateral
Equity financing
15. The process of adjusting for the time value of money backward in time to present value. See also Compounding.
Financing mix
Traditional profit centers
Discounting
Bond rating agency
16. The balance sheet category that includes actual money on hand as well as money equivalents - such as savings and checking accounts. It excludes cash restricted as to its use for something other than current operations.
Not-for-profit
Long-term debt to net assets ratio
Restricted donation
Cash and cash equivalents
17. The difference between what was planned (budgeted) and what was achieved (actual).
Present value of an annuity
Revenues
Budget variance
Billing float
18. Costs not traced to a cost object - but that must eventually be allocated across cost objects. See also Direct costs.
Realization principle
Other income
Indirect costs
Tangible assets
19. (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;
Mutually exclusive projects
Return on net assets
Billing - collections - and disbursement policies and procedures
Properties and equipment
20. (non-operating revenues/total operating revenues)- A ratio that reflects how dependent the organization is on non-patient care related net income.
Basis of Allocation
Cost
Creditor
Non-operating ratio
21. [operating income/total operating revenues]- The proportion of profit remaining after subtracting total operating expenses from operating revenues.
Co-payments
Operating margin
Mission statement
Cost centers
22. A catchall category for miscellaneous expenses and losses not included in other categories (telephone - travel - meals - etc.).
Financing mix
Other expenses
Cost of goods sold
Accounts receivable
23. [(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.
Spillover cash flows
Issuer
Book value
Expense cost variance
24. Assets that have restrictions on their use which will be removed either with the passage of time or the occurrence of some event.
Activity Based Costing
Temporarily restricted net assets
Net Assets to Total Assets
Basic accounting equation
25. If a project is undertaken - these cash flows are the indirect increases or decreases in cash flows that will occur elsewhere in the organization.
Lender
Current ratio
Tangible assets
Spillover cash flows
26. A method of allocating costs that are not directly paid for (utilities - rent - administration) into those products or services to which payment is attached (day of care - a brief visit). See also Activity-based costing.
Times interest earned
Short-term financing
Net assets to total assets
Step-down method
27. [Total assets/Net Assets]
Incremental cash flows
Donation
Leverage
Expense budget
28. The idea that a dollar today is worth more than a dollar in the future.
Time value of money
Increase in unrestricted net assets
Fixed supplies budget
Ratio analysis
29. Financing that will be paid back in less than one year.
Short-term financing
Temporarily restricted net assets
Book value
Income from investments
30. [Total Liabilities/ Net assets]
Long-term debt - net of current portion
Debt to equity
Tangible assets
Budget
31. The purchase of assets with contributed and internally generated funds. See also Debt financing.
Cost centers
For-profit
Equity financing
G & A expenses
32. 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.
Accrual basis of accounting
Other support
Ratio analysis
Billing - collections - and disbursement policies and procedures
33. The planning process that identifies the organization's mission and strategy in order to position itself for the future.
Cost centers
Mutually exclusive projects
Strategic planning
Accounts payable
34. 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?
Statement of cash flows
Mission Center
Non-operating expenses
Accounting period
35. Amounts earned by the organization from the provision of service or sale of goods.
Efficiency
Quick ratio
Centralization
Revenues
36. (excess of revenues over expenses/total assets)- A measure of how much profit is earned for each dollar invested in assets. In for-profit organizations it is called return on assets and is calculated as: net income/assets.
Return on total assets
Coupon payment
Direct costs
Liquidity ratios
37. The cost of activities that take place to produce the final cost object
Traditional profit centers
Liabilities
Intermediate Cost Object
Notes payable
38. The elapsed time between when the patient or third-party payor sends the payment and the time the health care provider receives the payment.
Spillover cash flows
Perpetuity
Mail float
Present value of an annuity
39. 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
Amortization of a loan
Return on net assets
Fixed costs
Cash flows from investing activities
40. Organizational unit given the responsibility to carry out one or more tasks and/or achieve one or more outcomes.
Responsibility center
Investment grade
Asset mix
G & A expenses
41. 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.
Liquidity ratios
Prepaid assets
Long-term investments
Realization principle
42. Demonstrates the ability to pay off long term debt
Net increase (decrease) in cash and cash equivalents
Allocation
Financing activities
Long Term Solvency ratios
43. Capital investment decisions designed to increase the operational capability of a health care organization.
Expansion decisions
Net Assets to Total Assets
Revenue budget
Allocation base
44. An organization whose profits can be distributed outside the organization and must pay taxes. Also called investor-owned organizations.
For-profit
Efficiency
Net accounts receivable
Coupon
45. Financial and non-financial standards against which organizational performance is measured.
Performance measure
Discounting
Discount rate
Operating margin
46. The cost of a capital asset (i.e. building or equipment) minus accumulated depreciation.
Operating budget
Book value
Matching principle
Asset Management ratios
47. 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
Net Assets
Annuity
Non-operating income
Return on total assets
48. The elapsed time between financial statements. Common accounting periods
Tax-exempt bonds
Permanently restricted net assets
Accounting period
Cash flows from investing activities
49. A borrower's assets on which a lender has legal claim if a borrower defaults on a loan.
Top-down budgeting
Program budget
Service centers
Collateral
50. The rate of return required to undertake a project. Also called the hurdle rate or discount rate.
Program budget
SWOT analysis
Collections policies and procedures
Cost of capital