FACHE - HC Finance 2024 Exam (A+ Guaranteed)

Definition and Rule of Inurement correct answers - Diversion of funds to persons in governance or mgt as a result of their position of trust - Directors, officers, trustees are prohibited from engaging in business that allows them to derive financial advantage from their governing board role (conflict of interest) What is a best practice (as far as how soon in days) in receiving payments from date of invoice? correct answers Less than 50 days Definition of working capital correct answers Amount of cash required to support operations - for the period of delay in collecting revenue. 5 Financial Mgt functions that are essential for survival correct answers 1) Financial planning 2) Pricing 3) Mgt of long term capital 4) Mgt of short term assets & liabilities 5) Multiple corporate acct Relation of Finance to the Governing Board correct answers The finance system relates directly to the gov'n board through the finance committee, and the CFO often represents the Sr. Mgt team on the committee. What 4 budgets comprise a financial budget? correct answers 1) Income & expense budget 2) Budgeted financial statements 3) Cash flow budget 4) Capital & new program budget Definition of Financial Budget correct answers Expectation of future financial performance What does Activity-Based Costing (ABC) promote? correct answers Control of services, the use of make or buy (in-source or out-source) decisions, and improvement of processes that cross several accountability centers. Definition of Capital (capital goods) correct answers Human-made resources (machinery & equipment) used to produce goods & services that do not directly satisfy human wants. General Definition of Capital Expenditure correct answers Purchases of Land, Buildings, & Equipment for operations, are not for resale, and have a useful life of 1yr, cost of $500 or more, and are subject to depreciation. 6 General Conditions required to be a Capital Expenditure correct answers 1) Expenditure of Land, Buildings, & Equipment (Capital Goods) 2) Used for operations, 3) are not for resale, 4) have a useful life of 1yr,