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Test your basic knowledge |
ACCA Financial Management
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Study First
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
.
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 security interest in one or more assets granted to lenders in a secured loan.
Discounted cash flows
Bad debt
MV
Lien
2. An entity that temporarily grants the use of money or an asset to another in return for compensation - usually in the form of interest.
Line of credit
For-profit
Activity ratios
Lender
3. 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.
Current assets
Allocation base
Capital appreciation
Footnotes
4. The budget format that lists revenues and expenses by category - such as labor - travel - and supplies. Categories are sometimes broken down into sub-categories. See also Performance budget and Program budget.
Statement of cash flows
Line-item budget
Days cash on hand
Co-payments
5. [Total Revenues/ Total Assets]
Assets
Budget
Debt to equity
Asset Turnover Ratio
6. Capital investment decisions designed to increase the operational capability of a health care organization.
Cash flows from operating activities
Expansion decisions
Ending inventory
Accumulated depreciation
7. The ease and speed with which an asset can be turned into cash.
Precautionary purposes
Balance sheet
Expense cost variance
Liquidity
8. Price times total quantity.
Total revenue
Expenses
Deferred revenues
Administrative profit centers
9. The cost of activities that take place to produce the final cost object
Bond rating agency
Short-term financing
Intermediate Cost Object
Net assets to total assets
10. Organizational unit given the responsibility to carry out one or more tasks and/or achieve one or more outcomes.
Responsibility center
Other income
Investment grade
Comparative approach
11. What a series of equal payments in the future is worth today taking into account the time value of money.
Program budget
Long-term debt - net of current portion
Asset Turnover Ratio
Present value of an annuity
12. 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.
Debt service coverage
Collection float
Mission Center
Net accounts receivable
13. A security whose interest rate does not change during the lifetime of the bond.
Other revenues
Basic accounting equation
Fixed (interest) rate debt
G & A expenses
14. 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.
Annuity
Billing - collections - and disbursement policies and procedures
Ratio analysis
Financing activities
15. Revenues of the organization earned in non-healthcare related activities.
Coupon
Non-operating revenues
Mail float
Interest
16. 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.
Liabilities
Perpetuity
Discount rate
Budget variance
17. 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.
Liquidity ratios
Traditional profit centers
Return on total assets
Lease
18. Amounts earned by the organization from the provision of service or sale of goods.
Revenues
Traditional profit centers
Footnotes
Capital structure decision
19. [(cash + marketable securities + net accounts receivable)/current liabilities)- A measure of the organization's liquidity.
Payback
Efficiency
Quick ratio
Operating cash flows
20. General and administrative expenses. Operating expenses that are not contained in the labor or supplies budgets.
Mail float
G & A expenses
Tangible assets
Interest
21. A legal obligation to pay the holder of the note or lien.
Traditional profit centers
Notes payable
Investor
Bond rating
22. Agencies that assess the "credit worthiness" of an organization. The two major rating agencies are Moody's and Standard & Poor.
Matching principle
Beginning inventory
Comparative approach
Bond rating agency
23. [(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
Prepaid assets
Expense volume variance
Other expenses
Fully allocated costs
24. [(excess of revenues over expenses + interest expense + depreciation expense)/(interest expense + principal payments))- A ratio that measures an organization's ability to pay back a loan. In for-profit organizations - it is calculated as: (net income
Opening inventory
Cash equivalents
Expansion decisions
Debt service coverage
25. The rise in an economy's general level of prices.
Disbursement float
Inflation
Expenses
Incremental cash flows
26. An entity that sells bonds in order to raise money.
Beginning inventory
Other expenses
Issuer
Net present value
27. When products are manufactured in batches in different sizes - and overhead activities are affected by the size of the batch being produced
Investment centers
Volume diversity
Return on net assets
Perpetuity
28. Funds provided by a private entity or individual without the requirement of repayment. Donations can either be restricted or unrestricted.
Donation
Total asset turnover
Net accounts receivable
Volume diversity
29. 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.
Operating activities
Investment grade
Bond rating agency
Controlling activities
30. Service center costs are allocated to both mission centers and other service centers
Revenues
Step Down
Capital investment decisions
Allocation base
31. Amounts given to the organization for operating purposes - such as governmental appropriations and unrestricted donations.
Other support
Cash and cash equivalents
Realization principle
Depreciation
32. Demonstrates the extent to which the organization is earning money from its assets. Not usually as imp for NPs - varies w/ NP.
FV
Asset Management ratios
Temporarily restricted net assets
Cash budget
33. An amount owed to the organization that will not be paid. Charity care is not considered a bad debt since nothing is owed to the organization for services provided.
Bad debt
Transaction
Cash and cash equivalents
Disbursement float
34. Private entity or individual who makes a donation
Lien
HMO
Donor
Cash and cash equivalents
35. 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)
Accounts payable
Basis of Allocation
Cash flows from financing activities
Non-operating income
36. Financing that will be paid back in less than one year.
Short-term financing
Basic accounting equation
Fixed Asset Turnover
Periodic payments
37. Cash flows that occur solely as a result of undertaking a project. Basically the marginal difference between alternatives.
Fixed labor budget
Incremental cash flows
Discounting
Tangible assets
38. The activities of an organization directly related to its main line of business.
Clinical cost centers
Operating activities
Strategic financial planning
Horizontal analysis
39. The amount of time between when an organization receives a service and pays for it.
Equity financing
Revenues
Properties and equipment - net
Disbursement float
40. Assets that have a physical presence.
Times interest earned
Tangible assets
Return on net assets
Mortgage
41. Irregular cash flows - typically occurring at the end of the life of a project.
Certainty
Discount rate
Base Budget
Non-regular cash flows
42. [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
Long-term debt to net assets ratio
Current assets
Temporarily restricted net assets
Net assets to total assets
43. A budget in which line items are presented by program.
Program budget
Long-term debt - net of current portion
Cost of capital
Fixed labor budget
44. The degree of dispersion of responsibility within an organization. See also Centralization.
Expense volume variance
Realization principle
Decentralization
Administrative cost centers
45. Directly related to the purposes of the organization and the delivery of services
Acid test ratio
Decentralization
Mission Center
Other support
46. Ratios that answer the question: How well is the organization positioned to meet its short-term obligations?
Loan amortization schedule
Other income
Liquidity ratios
Single/Simple Step
47. [(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
Times interest earned
Multiyear budget
Lease
Administrative profit centers
48. An investment that generates an annuity for an indefinite period of time - basically forever.
MV
Perpetuity
Cost centers
Periodic payments
49. 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.
Time value of money
IRR
Present value of an annuity
Common costs
50. 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.
Billing - collections - and disbursement policies and procedures
Performance measure
Common costs
Investment grade