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






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






3. Return on investment. The percentage gain or loss experienced from an investment.






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






5. 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






6. The amount remaining after subtracting variable costs from revenues. When the organization is not at capacity - it is the "profit" the organization makes on providing each new unit that is available to cover all other costs. Contribution margin may b






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






8. 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.






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






10. 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.






11. Proceeds lost by foregoing other opportunities.






12. 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.






13. 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.






14. 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.






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






16. [(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






17. The income (operating revenues -operating expenses) earned in non-health-care related activities.






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






19. [Total assets/Net Assets]






20. Financing that will be paid back in less than one year.






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






22. 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.






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






24. The amount of time between when an organization receives a service and pays for it.






25. The amount of supplies used to provide a service or good.






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






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






28. {current liabilities/[(total expenses






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






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






31. The rise in an economy's general level of prices.






32. The organization's legal obligations to pay its creditors. Liabilities are classified as current and non-current. Liabilities are one of the three major categories on the balance sheet and are part of the fundamental accounting equation.






33. The cash flows derived from an organization's operating activities.






34. [Surplus/Operating Revenues]






35. Supplementing traditional sources of revenue with new sources.






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






37. Requiring the patient to pay part of his/her health care bill. These payments are used to prevent over-utilization of services.






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






39. A borrower's assets on which a lender has legal claim if a borrower defaults on a loan.






40. Debt to be paid off in a period longer than one year.






41. When products are manufactured in batches in different sizes - and overhead activities are affected by the size of the batch being produced






42. [total revenues/total assets].- This ratio measures the overall efficiency of the organization's assets to produce revenue. It answers the question: For every dollar in assets - how many dollars of revenue are being generated?






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






44. 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.






45. [Total Revenues/ Total Assets]






46. The purchase of assets with contributed and internally generated funds. See also Debt financing.






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






48. The elapsed time between when the patient or third-party payor sends the payment and the time the health care provider receives the payment.






49. [current assets/current liabilities].- This liquidity ratio measures the proportion of all current assets to all current liabilities to determine how easily current debt can be paid off. It is one of the most commonly used ratios.






50. The resources owned by the organization. It is one of the three major categories on the balance sheet.