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ACCA Financial Management

  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. The amount the holder of the coupon receives periodically - usually semiannually. Over the year - it equals the coupon rate times the face value of the bond.

2. 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.

3. Demonstrates the extent to which the organization is earning money from its assets. Not usually as imp for NPs - varies w/ NP.

4. [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).

5. 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.

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

7. 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.

8. Organizational units responsible for providing services and controlling their costs. There are two major types: clinical cost centers and administrative cost centers.

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

10. Organizational units primarily responsible for providing services and earning a profit based on the health care services provided.

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

12. A technique to evaluate an organization's strengths - weaknesses - opportunities - and threats. Also called a WOTS-up analysis.

13. An assignment or grading of the likelihood that an organization will not default on a bond.

14. {current liabilities/[(total expenses

15. 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.

16. If a project is undertaken - these cash flows are the indirect increases or decreases in cash flows that will occur elsewhere in the organization.

17. Traces indirect costs to activity that uses them. Overhead collected in pools and distributed to cost object by cost drivers.

18. 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

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

20. What a series of equal payments in the future is worth today taking into account the time value of money.

21. 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.

22. Activities that provide guidance and feedback to keep the organization within its budget - such as staff meetings - regular reports - and bonuses.

23. Capital investment decisions designed to increase an organization's strategic position.

24. Agencies that assess the "credit worthiness" of an organization. The two major rating agencies are Moody's and Standard & Poor.

25. 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

26. Demonstrates the ability to pay off long term debt

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

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

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

30. {[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).

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

32. The budget used to forecast - and in some cases justify - the expenditures (and in some cases the sources of financing) for non-current assets.

33. Portion of profit an organization distributes to investors. By law - only investor-owned health care organizations can distribute dividends outside the organization.

34. A measure of the income earned from operating activities. It is calculated as: unrestricted revenues - gains - and other support -expenses and losses.

35. 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.

36. A series of equal cash flows made or received at regular time intervals. Ordinary annuities occur at the end of each period whereas annuities due occur at the beginning of each period.

37. A budget in which line items are presented by program.

38. Current year budget projected for the coming fiscal year assumes no program changes and adjust for price - workload - annualizations

39. The difference between current assets and current liabilities.

40. How an organization chooses to finance its working capital needs.

41. 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.

42. The increase in the value of an investment from the time it is purchased until the time it is sold.

43. 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.

44. An entity that temporarily grants the use of money or an asset to another in return for compensation - usually in the form of interest.

45. One of the four major financial statements of a health care organization. It presents a summary of the organization's assets - liabilities - and net assets as of a certain date.

46. A note payable that has as collateral real assets and that requires periodic payments.

47. [Net Accounts Receivable/(Revenue/356)]

48. The revenue and expense budgets of an organization.

49. (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;

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