Exam (elaborations)
ACHE FACHE HC FINANCE 2023 – 2024 WITH COMPLETE SOLUTION
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ACHE FACHE HC FINANCE 2023 – 2024 WITH COMPLETE SOLUTION
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ACHE FACHE HC FINANCE (2023 – 2024)WITH COMPLETE SOLUTION
Definition and Rule of Inurement - - 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? -
Less than 50 days
Definition of working capital - Amount of cash required to support operations - for the period of
delay in collecting revenue.
5 Financial Mgt functions that are essential for survival - 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 - 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? - 1) Income & expense budget
2) Budgeted financial statements
3) Cash flow budget
4) Capital & new program budget
, Definition of Financial Budget - Expectation of future financial performance
What does Activity-Based Costing (ABC) promote? - 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) - Human-made resources (machinery & equipment) used to
produce goods & services that do not directly satisfy human wants.
General Definition of Capital Expenditure - 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 - 1) Expenditure of Land, Buildings, &
Equipment (Capital Goods)
2) Used for operations,
3) are not for resale,
4) have a useful life of >1yr,
5) cost of $500 or more,
6) are subject to depreciation.
What is Section 501(c)(3)? - Section of the IRS Code that makes a HCO tax-exempt
What are 2 Ratios that measure the ability to pay current liabilities? - 1) Current Ratio
2) Acid Test (aka Quick) Ratio
What are 3 Ratios used to measure ability to sell inventory and collect receivables? - 1) Inventory
Turnover ratio
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