Financial Management

Question 1

financial management includes applying management principles to financial assets of an org, while also playing an important part in

Answer 1

fiscal management.

Question 2

process of calculating amount of capital that is required by an org & then determining its allocation.

Answer 2

Financial planning

Question 3

financial management department of any firm is handled by

Answer 3

financial manager.

Question 4

financial management department fxns:

Answer 4

• calculating capital required
• formation of capital structure
• effective management of money
• financial control
• investing the capital
• allocation of profits

Question 5

fxn of financial management:
➔ has to calculate amount of funds an organization requires.
➔ depends upon the policies of firm w/ regards to expected expenses & profits
➔ amount required has to be estimated in such way that earning capability of the organization increases

Answer 5

Calculating the Capital Required

Question 6

fxn of financial management:
➔ once the amount of capital the firm requires has been estimated, capital structure needs to be formed
➔ involves debt equity analysis in short-term & long-term.
➔ depends upon the amount of capital firm owns, & amount that needs to be raised via external sources.

Answer 6

Formation of Capital Structure

Question 7

fxn of financial management:
➔ every org/ firm needs to invest money in order to raise more capital & gain regular returns.
➔ hence, financial manager needs to invest the org’s funds in safe and profitable ventures.

Answer 7

Investing the Capital

Question 8

fxn of financial management:
➔ once org has earned good amount of net profit, it’s the financial manager’s duty to efficiently allocate it.
➔ could involve keeping part of net profit for contingency, innovation, or expansion purposes, while another part of the profit can be used to provide dividends to the shareholders

Answer 8

allocation of profits

Question 9

fxn of financial management:
- responsible for effectively managing the firm’s money.
➔ money is required for various purposes in the firm.

Answer 9

effective management of money

Question 10

fxn of financial management:
➔ not only does financial manager have to plan, organize, and obtain funds, but he also has to control and analyze the firm’s finances in short-term & long-term.
➔ can be done using financial tools such as financial forecasting, ratio analysis, risk management, & profit-cost control.

Answer 10

financial control

Question 11

in hospital institutional environment, lab usually operates as a division under

Answer 11

vice president/ director of operations

Question 12

major differences of non-hospital environment to hospital management: p

Answer 12

-population served
- hours & scope of operation
- turnaround time requirements,
- need for ancillary functions

Question 13

most of testing done by independent lab is for

Answer 13

outpatients of physicians and clinics.

Question 14

most specimens are transported during ____ hours and arrive at lab in the _____

Answer 14

daylight; late evening or night.

Question 15

type of budget that forecast of revenues & expense expected for one or more future periods.

Answer 15

OPERATIONAL BUDGET

Question 16

OPERATIONAL BUDGET typically formulated by management team just prior to the ____, & shows expected activity levels for the ____

Answer 16

beginning of the year; entire year.

Question 17

type of budget that process that business uses to determine which proposed fixed assets purchases it should accept, & declined.

Answer 17

CAPITAL BUDGET

Question 18

type of budget that process that used to create quantitative view of each proposed fixed asset investment, thereby giving a rational basis for making a judgment

Answer 18

capital budget

Question 19

Capital Budgeting Methods:
➔ identify net change in cash flows associated w/ fixed asset purchase, & discount them to their present value.

Answer 19

net present value analysis

Question 20

Capital Budgeting Methods:
➔ identify bottleneck machine/ work center in production environment & invest in those fixed assets that maximize the utilization of the bottleneck operation.
➔ business is less likely to invest in areas downstream from the bottleneck operation (since they are constrained by the bottleneck operation) & more likely to invest upstream from the bottleneck (since additional capacity there makes it easier to keep the bottleneck fully supplied with inventory).

Answer 20

Constraint Analysis

Question 21

Capital Budgeting Methods:
➔ determine period required to generate sufficient cash flow from a project to pay for initial investment in it
➔ essentially a risk measure, for the focus is on the period of time that investment is at risk of not being returned to the company

Answer 21

payback period

Question 22

Capital Budgeting Methods:
➔ determine whether increased maintenance can be used to prolong the life of existing assets, rather than investing in replacement assets.
➔ can substantially reduce company’s total investment in fixed assets.

Answer 22

avoidance period

Question 23

is mandatory activity for larger fixed asset proposals

Answer 23

capital budgeting

Question 24

process by which company obtains estimates of costs of producing product, providing service, performing function, or operating department.

Answer 24

cost finding

Question 25

TYPE OF COST FINDING:
- in this method, accountant first accumulates costs of each production operation/ process for a specified time frame.
- this sum is then restated as an average by dividing total costs of production by the total output in the period.
- can be used whenever the output of individual processes is uniform or homogenous, as in cement manufacturing, flour milling, and other relatively continuous production processes.

Answer 25

PROCESS COSTING

Question 26

TYPE OF COST FINDING: used when individual production centres/ departments work on variety of products rather than just one during a typical time period

Answer 26

JOB-ORDER COSTING

Question 27

2 CATEGORIES UNDER JOB-ORDER COSTING

Answer 27

PRIME COSTS
FACTORY OVERHEAD COSTS

Question 28

2 CATEGORIES UNDER JOB-ORDER COSTING:
traced directly to specific batch/ job lot, of products (direct labor & direct materials costs of production)

Answer 28

PRIME COSTS

Question 29

2 CATEGORIES UNDER JOB-ORDER COSTING: traced only to department operations/ factory as a whole & not to individual job orders (salary of departmental supervisor is an example of this)

Answer 29

FACTORY OVERHEAD

Question 30

➔ involves accumulation of costs of materials, labor, and overhead for a specific job.
➔ excellent tool for tracing specific costs to individual jobs and examining them to see if the costs can be reduced in later jobs
➔ used to accumulate costs at a small-unit level.

Answer 30

JOB COSTING

Question 31

job costing involves the following accounting activities:
1. _______: accumulates the cost of components and then assigns these costs to a product or project once the components are used.
2. _______: employees charge their time to specific jobs, which are then assigned to the jobs based on the labor cost of the employees.
3. ______: It accumulates overhead costs in cost pools, and then allocates these costs to jobs.

Answer 31

materials
labor
overhead

Question 32

main role is to assess whether an
organization is meeting its objectives or not.

Answer 32

financial control

Question 33

process of calculating the amount of capital that is required by an organization and then determining its allocation

Answer 33

FINANCIAL PLANNING

Question 34

assets (often money) that are used for future expenditures or investments

Answer 34

CAPITAL

Question 35

refers to intangible assets

Answer 35

Organizational capital

Question 36

The balance between assets and liablities (debt)

Answer 36

CAPITAL STRUCTURE

Question 37

something business owns:
something business owes:

Answer 37

ASSETS; LIABILITIES

Question 38

Business make a profit by building more _____ than_____

Answer 38

assets; liabilities

Question 39

are the rules or principles of your business’s accounting and financial practices. They should reflect your business’s values and culture.

Answer 39

Financial policies

Question 40

The purpose of the ______ is to conserve time and material by reducing the duplication of supplies and effort.

Answer 40

Central Supply Room

Question 41

is used to accumulate costs at a small-unit level.

Answer 41

Job costing

Question 42

The hospital can classify overall treatment in the following jobs:

Answer 42

• REGULAR CHECK-UP
• LAB TESTS
• FEES FOR SPECIALISTS
• FEES FOR BED