Solution manual forSolution
financialmanual
management
for financial
for public
management
health andfornot
public
for profit
healthorganizations
and not for profit
7th edition
organizations
steven a7th
finkler
edition steven a finkler 2026-04-10
Instructor’s Manual for Financial Management for Public, Health, and Not-for-Profit Organizations,1
2E
INTRODUCTION
Chapter 1 TO
FINANCIAL
MANAGEMENT
Questions for Discussion
1-1. Financial management is the subset of management that focuses on generating financial information
that can improve decisions. The decisions are oriented toward achieving the various goals of the
organization while maintaining a satisfactory financial situation. Financial management encompasses
the broad areas of accounting and finance.
1-2. In proprietary, or for-profit, organizations, an underlying goal is to maximize the wealth of the
owners of the organization.
1-3. In public service organizations, decisions are oriented toward achieving the various goals of the
organization while maintaining a satisfactory financial situation.
1-4. Accounting is a system for keeping track of the financial status of an organization and the financial
results of its activities. It has often been referred to as the language of business. The vocabulary
used by accounting is the language of nonbusiness organizations as well.
1-5. Accounting is subdivided into two major areas: managerial accounting and financial accounting.
Managerial accounting relates to generating any financial information that managers can use to
improve the future results of the organization. This includes techniques designed to generate any
financial data that might help managers make more effective decisions. Major aspects of managerial
accounting relate to making financial plans for the organization, implementing those plans, and then
working to ensure that the plans are achieved. Some examples of managerial accounting include
preparing annual operating budgets, generating information for use in making major investment
decisions, and providing the data needed to decide whether to buy or lease a major piece of
equipment. Financial accounting provides retrospective information. As events that have financial
implications occur they are recorded by the financial accounting system. From time to time (usually
monthly, quarterly, or annually), the recorded data are summarized and reported to interested users.
The users include both internal managers and people outside the organization. Those outsiders
include those who have lent or might lend money to the organization (creditors), those who might
sell things to the organization (called suppliers or vendors), and other interested parties. These
interested parties may include those with a particular interest in public service organizations, such as
regulators, legislators, and citizens. Financial reports provide information on the financial status of
the organization at a specific point in time, as well as reporting the past results of the organization‘s
operations (i.e., how well it has done from a financial viewpoint).
1 Solution manual for financial management
Pagefor1public health and not for profit organizations 7th edition steven a finkler.pdf
,Solution manual forSolution
financialmanual
management
for financial
for public
management
health andfornot
public
for profit
healthorganizations
and not for profit
7th edition
organizations
steven a7th
finkler
edition steven a finkler 2026-04-10
Chapter 3: Additional Budgeting Concepts 3-2
1-6. Finance focuses on the alternative sources and uses of the organization‘s financial resources.
Obtaining funds when needed from appropriate sources and the deployment of resources within the
organization fall under this heading. In addition, finance involves the financial markets (such as
stock and bond markets) that provide a means to generating funds for organizations.
1-7. Yes. Achieving the goals of the organization requires financial planning. Financial management
provides information for managers to use in making their decisions. It helps managers by
providing information on the likely financial impact of each proposed alternative. It also provides
information about financial stability, efficiency, and effectiveness.
1-8. Clearly, we might expect some public service organizations that are proprietary, such as some
hospitals, to earn profits. But what about other public service organizations such as charities? They
should make a profit as well. Profits provide a safety margin against unexpected costs, provide
resources to replace buildings and equipment, and to expand and improve services.
1-9. Federal government (see text Figure 1-1)
Individual income taxes
Social insurance taxes
Corporate income tax
State and local government (see text Figure 1-4)
Sales and gross receipts tax
Federal government
Property taxes
Individual income taxes
Health sector (see text Figure 1-6)
Private insurance
Medicare
Medicaid
Other government programs
Not-for-profit sector (see text)
Private payments for goods and services
Government payments for goods and services
Donations
1-10. Federal government spending exceeded $6 trillion in 2020 and state and local government spending
was more than $3 trillion in 2018. In contrast, the GDP was $21 trillion in 2020. For more up to
date information, examine the statistical tables of the most recent Economic Report of the
President, which is available online.
1-11. The reported surplus includes both on and off budget items. Social security taxes represent an off
budget item that until recently raised more revenue than was spent on social security payments.
2 Solution manual for financial management
Pagefor2public health and not for profit organizations 7th edition steven a finkler.pdf
,Solution manual forSolution
financialmanual
management
for financial
for public
management
health andfornot
public
for profit
healthorganizations
and not for profit
7th edition
organizations
steven a7th
finkler
edition steven a finkler 2026-04-10
Finkler, Financial Management for Public, Health, and Not-for-Profit Organizations 7e
© CQ Press, 2023
The surplus in this area offset other government losses, and even resulted in an overall surplus for
the federal government. This is no longer the case, and, over time, trust fund resources will be used
up to provide benefits. As the federal government will not have access to the excess resources from
social security, it will have to borrow and increase the total level of federal debt, unless revenues or
spending are changed.
1-12. Sometimes gifts come with strings attached. If the conditions of the gift create a burden that the
organization does not want to accept, or somehow requires the organization to work in opposition
to its mission, it might turn down the gift.
1-13. The World Bank has defined NGOs as "private organizations that pursue activities to relieve
suffering, promote the interests of the poor, protect the environment, provide basic social services,
or undertake community development" (World Bank Operational Directive 14.70). NGOs are quite
similar to the not-for-profit organizations. They are primarily mission-focused rather than profit-
focused. NGOs fall into three main categories: community-based, national, and international.
PLANNING
Chapter 2 FOR
SUCCESS:
BUDGETING
Questions for Discussion
2-1. Planning helps the organization by causing its employees to think ahead and anticipate change.
This is done by establishing specific goals and objectives, communicating those objectives to the
individuals who must achieve them, forecasting future events, developing alternatives, selecting
from among alternatives, and coordinating activities. The activities are summarized in a document
called a budget. The budget describes what we hope to achieve and the resources that will be used
to carry out the organization‘s activities.
2-2. The organization‘s mission represents its reason for existence. For public, health, and not-for-
profit organizations, finances often become a means to an end, rather than the end itself. This
mission cannot solely be making profits. Financial management must help balance the focus on
profit with the public service elements of the organization‘s mission.
2-3. Strategic plans translate the mission of the organization into an approach or set of approaches that
will be used to accomplish the mission, and a broad set of goals that need to be attained to
achieve the mission. Strategic plans set the organization‘s long-term direction. They often do not
3 Solution manual for financial management
Pagefor3public health and not for profit organizations 7th edition steven a finkler.pdf
, Solution manual forSolution
financialmanual
management
for financial
for public
management
health andfornot
public
for profit
healthorganizations
and not for profit
7th edition
organizations
steven a7th
finkler
edition steven a finkler 2026-04-10
Chapter 3: Additional Budgeting Concepts 3-4
have specific financial targets. However, they set the stage for the specific, detailed budgets that
will be established to achieve the organization‘s goals.
2-4. Whereas the strategic plan establishes goals, the long-range plan considers how to achieve those
goals. Long-range plans establish the major activities that will have to be carried out in the
coming three to five years. This process links the strategic plan to the day-to-day activities of the
organization. Organizations that do not prepare a long-range plan are often condemned to only
sustain current activities, at best.
2-5. Budgets establish the amount of resources that are available for specific activities. However,
budgets do not merely limit the resources that can be spent. They represent the detailed plan that
supports the organization‘s efforts to achieve its mission, and help the organization determine and
achieve its goals and objectives. The budgeting process is one of exploring possibilities.
Organizations determine what things they can and cannot do. They examine alternatives and
choose those that are likely to yield the best results. They become attuned to possible problems
and can work to find solutions. Budgeting forces managers to think ahead, to have clear
expectations against which to measure performance, and to coordinate the activities of the
organization so that everyone is working toward a common purpose.
Budgets are also used to control results. That is, budgets not only create plans, but they are
also used to help accomplish those plans. This is done by comparing actual results to the budget.
Looking at results, we can assess what needs to be corrected. How good a job did the
organization‘s management do? How well did the organization itself do? In order to evaluate
performance, one must have a standard or benchmark to compare with actual results. The budget
establishes the organization‘s expectations.
2-6. An organization may consider undertaking an activity that was not planned for when the annual
budget was prepared. At any time an organization can prepare a special budget for a specific
purpose. Appropriate approval should be obtained before implementing the budget.
2-7. An organization‘s budgets are often organized into a strategic plan, long-range plan, master
budget, and special purpose budgets.
2-8. Budgets present specific, measurable goals. An individual is much more likely to work efficiently
if there is a target to shoot for, assuming that the target is not unrealistic.
2-9. Most employees would prefer salaries that are substantially larger than the amounts they are
currently receiving. Organizations lack the revenues to pay for those raises. Most managers would
like more office space with new furniture and remodeled facilities. They would certainly like more
staff to carry out existing functions. Organizations must make choices concerning how to spend
their limited resources.
2-10. Depending on the specific organization, the volume of services provided may have plunged or
soared. This would have resulted in substantially more or less revenues than expected. If
revenues plunged, then we would have had more staff than needed, without the resources to pay
4 Solution manual for financial management
Pagefor4public health and not for profit organizations 7th edition steven a finkler.pdf
financialmanual
management
for financial
for public
management
health andfornot
public
for profit
healthorganizations
and not for profit
7th edition
organizations
steven a7th
finkler
edition steven a finkler 2026-04-10
Instructor’s Manual for Financial Management for Public, Health, and Not-for-Profit Organizations,1
2E
INTRODUCTION
Chapter 1 TO
FINANCIAL
MANAGEMENT
Questions for Discussion
1-1. Financial management is the subset of management that focuses on generating financial information
that can improve decisions. The decisions are oriented toward achieving the various goals of the
organization while maintaining a satisfactory financial situation. Financial management encompasses
the broad areas of accounting and finance.
1-2. In proprietary, or for-profit, organizations, an underlying goal is to maximize the wealth of the
owners of the organization.
1-3. In public service organizations, decisions are oriented toward achieving the various goals of the
organization while maintaining a satisfactory financial situation.
1-4. Accounting is a system for keeping track of the financial status of an organization and the financial
results of its activities. It has often been referred to as the language of business. The vocabulary
used by accounting is the language of nonbusiness organizations as well.
1-5. Accounting is subdivided into two major areas: managerial accounting and financial accounting.
Managerial accounting relates to generating any financial information that managers can use to
improve the future results of the organization. This includes techniques designed to generate any
financial data that might help managers make more effective decisions. Major aspects of managerial
accounting relate to making financial plans for the organization, implementing those plans, and then
working to ensure that the plans are achieved. Some examples of managerial accounting include
preparing annual operating budgets, generating information for use in making major investment
decisions, and providing the data needed to decide whether to buy or lease a major piece of
equipment. Financial accounting provides retrospective information. As events that have financial
implications occur they are recorded by the financial accounting system. From time to time (usually
monthly, quarterly, or annually), the recorded data are summarized and reported to interested users.
The users include both internal managers and people outside the organization. Those outsiders
include those who have lent or might lend money to the organization (creditors), those who might
sell things to the organization (called suppliers or vendors), and other interested parties. These
interested parties may include those with a particular interest in public service organizations, such as
regulators, legislators, and citizens. Financial reports provide information on the financial status of
the organization at a specific point in time, as well as reporting the past results of the organization‘s
operations (i.e., how well it has done from a financial viewpoint).
1 Solution manual for financial management
Pagefor1public health and not for profit organizations 7th edition steven a finkler.pdf
,Solution manual forSolution
financialmanual
management
for financial
for public
management
health andfornot
public
for profit
healthorganizations
and not for profit
7th edition
organizations
steven a7th
finkler
edition steven a finkler 2026-04-10
Chapter 3: Additional Budgeting Concepts 3-2
1-6. Finance focuses on the alternative sources and uses of the organization‘s financial resources.
Obtaining funds when needed from appropriate sources and the deployment of resources within the
organization fall under this heading. In addition, finance involves the financial markets (such as
stock and bond markets) that provide a means to generating funds for organizations.
1-7. Yes. Achieving the goals of the organization requires financial planning. Financial management
provides information for managers to use in making their decisions. It helps managers by
providing information on the likely financial impact of each proposed alternative. It also provides
information about financial stability, efficiency, and effectiveness.
1-8. Clearly, we might expect some public service organizations that are proprietary, such as some
hospitals, to earn profits. But what about other public service organizations such as charities? They
should make a profit as well. Profits provide a safety margin against unexpected costs, provide
resources to replace buildings and equipment, and to expand and improve services.
1-9. Federal government (see text Figure 1-1)
Individual income taxes
Social insurance taxes
Corporate income tax
State and local government (see text Figure 1-4)
Sales and gross receipts tax
Federal government
Property taxes
Individual income taxes
Health sector (see text Figure 1-6)
Private insurance
Medicare
Medicaid
Other government programs
Not-for-profit sector (see text)
Private payments for goods and services
Government payments for goods and services
Donations
1-10. Federal government spending exceeded $6 trillion in 2020 and state and local government spending
was more than $3 trillion in 2018. In contrast, the GDP was $21 trillion in 2020. For more up to
date information, examine the statistical tables of the most recent Economic Report of the
President, which is available online.
1-11. The reported surplus includes both on and off budget items. Social security taxes represent an off
budget item that until recently raised more revenue than was spent on social security payments.
2 Solution manual for financial management
Pagefor2public health and not for profit organizations 7th edition steven a finkler.pdf
,Solution manual forSolution
financialmanual
management
for financial
for public
management
health andfornot
public
for profit
healthorganizations
and not for profit
7th edition
organizations
steven a7th
finkler
edition steven a finkler 2026-04-10
Finkler, Financial Management for Public, Health, and Not-for-Profit Organizations 7e
© CQ Press, 2023
The surplus in this area offset other government losses, and even resulted in an overall surplus for
the federal government. This is no longer the case, and, over time, trust fund resources will be used
up to provide benefits. As the federal government will not have access to the excess resources from
social security, it will have to borrow and increase the total level of federal debt, unless revenues or
spending are changed.
1-12. Sometimes gifts come with strings attached. If the conditions of the gift create a burden that the
organization does not want to accept, or somehow requires the organization to work in opposition
to its mission, it might turn down the gift.
1-13. The World Bank has defined NGOs as "private organizations that pursue activities to relieve
suffering, promote the interests of the poor, protect the environment, provide basic social services,
or undertake community development" (World Bank Operational Directive 14.70). NGOs are quite
similar to the not-for-profit organizations. They are primarily mission-focused rather than profit-
focused. NGOs fall into three main categories: community-based, national, and international.
PLANNING
Chapter 2 FOR
SUCCESS:
BUDGETING
Questions for Discussion
2-1. Planning helps the organization by causing its employees to think ahead and anticipate change.
This is done by establishing specific goals and objectives, communicating those objectives to the
individuals who must achieve them, forecasting future events, developing alternatives, selecting
from among alternatives, and coordinating activities. The activities are summarized in a document
called a budget. The budget describes what we hope to achieve and the resources that will be used
to carry out the organization‘s activities.
2-2. The organization‘s mission represents its reason for existence. For public, health, and not-for-
profit organizations, finances often become a means to an end, rather than the end itself. This
mission cannot solely be making profits. Financial management must help balance the focus on
profit with the public service elements of the organization‘s mission.
2-3. Strategic plans translate the mission of the organization into an approach or set of approaches that
will be used to accomplish the mission, and a broad set of goals that need to be attained to
achieve the mission. Strategic plans set the organization‘s long-term direction. They often do not
3 Solution manual for financial management
Pagefor3public health and not for profit organizations 7th edition steven a finkler.pdf
, Solution manual forSolution
financialmanual
management
for financial
for public
management
health andfornot
public
for profit
healthorganizations
and not for profit
7th edition
organizations
steven a7th
finkler
edition steven a finkler 2026-04-10
Chapter 3: Additional Budgeting Concepts 3-4
have specific financial targets. However, they set the stage for the specific, detailed budgets that
will be established to achieve the organization‘s goals.
2-4. Whereas the strategic plan establishes goals, the long-range plan considers how to achieve those
goals. Long-range plans establish the major activities that will have to be carried out in the
coming three to five years. This process links the strategic plan to the day-to-day activities of the
organization. Organizations that do not prepare a long-range plan are often condemned to only
sustain current activities, at best.
2-5. Budgets establish the amount of resources that are available for specific activities. However,
budgets do not merely limit the resources that can be spent. They represent the detailed plan that
supports the organization‘s efforts to achieve its mission, and help the organization determine and
achieve its goals and objectives. The budgeting process is one of exploring possibilities.
Organizations determine what things they can and cannot do. They examine alternatives and
choose those that are likely to yield the best results. They become attuned to possible problems
and can work to find solutions. Budgeting forces managers to think ahead, to have clear
expectations against which to measure performance, and to coordinate the activities of the
organization so that everyone is working toward a common purpose.
Budgets are also used to control results. That is, budgets not only create plans, but they are
also used to help accomplish those plans. This is done by comparing actual results to the budget.
Looking at results, we can assess what needs to be corrected. How good a job did the
organization‘s management do? How well did the organization itself do? In order to evaluate
performance, one must have a standard or benchmark to compare with actual results. The budget
establishes the organization‘s expectations.
2-6. An organization may consider undertaking an activity that was not planned for when the annual
budget was prepared. At any time an organization can prepare a special budget for a specific
purpose. Appropriate approval should be obtained before implementing the budget.
2-7. An organization‘s budgets are often organized into a strategic plan, long-range plan, master
budget, and special purpose budgets.
2-8. Budgets present specific, measurable goals. An individual is much more likely to work efficiently
if there is a target to shoot for, assuming that the target is not unrealistic.
2-9. Most employees would prefer salaries that are substantially larger than the amounts they are
currently receiving. Organizations lack the revenues to pay for those raises. Most managers would
like more office space with new furniture and remodeled facilities. They would certainly like more
staff to carry out existing functions. Organizations must make choices concerning how to spend
their limited resources.
2-10. Depending on the specific organization, the volume of services provided may have plunged or
soared. This would have resulted in substantially more or less revenues than expected. If
revenues plunged, then we would have had more staff than needed, without the resources to pay
4 Solution manual for financial management
Pagefor4public health and not for profit organizations 7th edition steven a finkler.pdf
