Test your basic knowledge |

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






2. 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.






3. Funds provided by a private entity or individual without the requirement of repayment. Donations can either be restricted or unrestricted.






4. 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.






5. The method of capital budgeting that compares the cash flows resulting from continuing with the existing alternative to those that would result if the equipment were replaced.






6. The degree to which standards are met.






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






8. Current assets. Net working capital equals current assets –current liabilities.






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






10. The planning process that identifies the organization's mission and strategy in order to position itself for the future.






11. 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.






12. That point at which total revenues equal total costs. It is described by the equation: (price x volume) = fixed costs + (variable cost per unit x volume).






13. 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.






14. [Surplus/Operating Revenues]






15. One of the four major financial statements. It summarizes the organization's revenues and expenses during an accounting period as well as other items that affect its unrestricted net assets. It is analogous to - but different from - an income stateme






16. 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.






17. 1) The resources used to produce a good or service. 2) The amount of cash given up in a transaction. 3) Price. The first definition is based on accrual accounting and the second on cash accounting.






18. Any product - service - customer - contract - project - process or other work unit for which a separate cost measurement is desired.






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






20. An estimate/measure of how much a tangible asset (such as plant or equipment) has been "used up" during an accounting period. It is an expense that does not require any cash outflow under the accrual basis of accounting. See also Accumulated deprecia






21. Recording expenses associated with making revenue at the same time as revenues are recognized






22. Responsibility centers responsible for making a certain return on investments.






23. Ratios that answer the question: How well is the organization positioned to meet its short-term obligations?






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






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






26. The category of assets summarizing the amount of the major capital investments of the facility in plant - property - and equipment (PP&E). Plant means buildings - property is land - and equipment includes a wide variety of durable items from beds to






27. 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).






28. (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;






29. 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.






30. An entity that owns other companies.






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






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






33. Price times total quantity.






34. Costs that stay the same in total over the relevant range as volume increases - but that change inversely on a per unit basis.






35. 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.






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






37. 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.






38. The amount of the total revenue variance that occurs because the actual average rate charged varies from that originally budgeted. It can be calculated using the formula: (actual rate -budgeted rate) x actual volume.






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






40. A statistic used to allocate costs from a cost center based on a cause and effect relationship. For example - a common allocation base to allocate the costs of maintaining medical records is number of visits. See also Cost driver.






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






42. Proceeds lost by foregoing other opportunities.






43. The unit of service which we wish to know the cost for (hospital admission - classroom hour - course - etc.)






44. 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.






45. [(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






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






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






48. 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.






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






50. 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.