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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. 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.






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






3. A category of income that includes unrestricted interest - dividends - and gains from the sale of unrestricted investments.






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






5. Revenues generated from an organization's operating activities.






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






7. [Net Assets/Total Assets]. This ratio reflects the proportion of total assets financed by equity.






8. An entity that owns other companies.






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






10. 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.






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






12. [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






13. The changes in cash resulting from the normal operating activities of the organization.






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






15. Costs that are traced to a cost object. See also Indirect costs and Cost object.






16. The amount expected to be collected from payors. It is calculated as: gross accounts receivable – discounts and allowances – allowance for un-collectibles.






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






18. (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.






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






20. 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.






21. Revenue is recorded when goods or services are delivered






22. Revenues of the organization earned in non-healthcare related activities.






23. Irregular cash flows - typically occurring at the end of the life of a project.






24. 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






25. 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.






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






27. Financial and non-financial standards against which organizational performance is measured.






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






29. (non-operating revenues/total operating revenues)- A ratio that reflects how dependent the organization is on non-patient care related net income.






30. Monies received that have not yet been earned. One of the most common deferred revenues is the receipt of capitation on the basis of per member per month (PMPM).






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






32. 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






33. Setting aside cash to meet unexpected demands - such as unexpected maintenance of a facility or piece of equipment.






34. Health maintenance organization. Entities that receive premium payments from enrollees with the understanding that the HMO will be financially responsible for all predefined health care required by its enrollees for a specified period of time. The he






35. 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.






36. 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.






37. Donated assets that have restrictions on their use which will never be removed.






38. 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.






39. Previously restricted assets no longer restricted because the terms of the restriction have been met.






40. 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.






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






42. The central document of the planning/control cycle. It identifies revenues and resources that will be needed by an organization to achieve its goals and objectives.






43. I) Organizations that have a special designation because they provide goods or services that result in needed community benefit. In turn - such organizations are not required to pay most taxes. 2) The designation of an organization as one that is not






44. Ratios that measure how efficiently an organization is using its assets to produce revenues.






45. 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.






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






47. The ease and speed with which an asset can be turned into cash.






48. Ratios that measure how the organization's assets are financed and/or whether the organization can take on new debt.






49. 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.






50. Price times total quantity.