Solution Manual for Financial Management for Public Health, and Not-for-Profit Organizations 7th Edition by Finkler, Calabrese & Smith Verified Chapters 1 - 15, Complete

Instructor’s Manual for Financial Management for Public, Health, and Not-for-Profit
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SOLUTIONS MANUAL for Financial Management for Public
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Health, and Not-for-Profit Organizations 7th Edition by
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Steven Finkler, Thad Calabrese, (Complete 15 Chapters)
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,Chapter 3: Additional ,A , A
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Budgeting

INTRODUCTION
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ANAGEMENT
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1-1. Financial management is the subset of management that focuses on generating financial
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informationthat can improve decisions. The decisions are oriented toward achieving the various
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goals of the organization while maintaining a satisfactory financial situation. Financial
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management encompassesthe broad areas of accounting and finance.
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1-2. In proprietary, or for-profit, organizations, an underlying goal is to maximize the wealth of the
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owners ofthe organization.
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1-3. In public service organizations, decisions are oriented toward achieving the various goals of the
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organization while maintaining a satisfactoryfinancialsituation.
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1-4. Accounting is a system for keeping track of the financial status of an organization
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and the financial results of its activities. It has often been referred to as the language of business.
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The vocabulary used byaccounting is the language ofnonbusiness organizations as well.
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1-5. Accounting is subdivided into two major areas: managerial accounting and financial accounting.
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Managerial accounting relates to generating any financial information that managers can use to
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improve the future results of the organization. This includes techniques designed to generate
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any financial data that might help managers make more effective decisions. Major aspects of
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managerial accounting relate to making financial plans for the organization, implementing those
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plans, and then working to ensure that the plans are achieved. Some examples of managerial
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accounting include preparing annual operating budgets, generating information for use in
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making major investment decisions, and providing the data needed to decide whether to buy or
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lease a major piece of equipment. Financial accounting provides retrospective information. As
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events that have financial implications occur theyare recorded bythe financialaccounting system.
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From time to time (usually monthly, quarterly, or annually), the recorded data are summarized and
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reported to interested users.The users include both internal managers and people outside the
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organization. Those outsiders include those who have lent or might lend money to the
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organization (creditors), those who might sell things to the organization (called suppliers or
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vendors), and other interested parties. These interested parties may include those with a
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particular interest in public service organizations, such as regulators, legislators, and citizens.
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Financial reports provide information on the financial status of the organization at a specific
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point in time, as well as reporting the past results of the organization‘s operations (i.e., how well
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it has done froma financial viewpoint).
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, Instructor’s Manual for Financial Management for Public, Health, and Not-for-Profit ,A ,A ,A ,A ,A ,A ,A ,A ,A




1-6. Finance focuses on the alternative sources and uses of the organization‘s financial resources.
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Obtaining funds when needed from appropriate sources and the deployment of resources within
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theorganization fall under this heading. In addition, finance involves the financial markets (such as
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stock and bond markets) that provide a means to generating funds for organizations.
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1-7. Yes. Achieving the goals of the organization requires financial planning. Financial management
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provides information for managers to use in making their decisions. It helps managers by
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providing information on the likely financial impact of each proposed alternative. It
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also provides information about financialstability, efficiency, and effectiveness.
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1-8. Clearly, we might expect some public service organizations that are proprietary, such as some
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hospitals, to earn profits. But what about other public service organizations such as charities?
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They should make a profit as well. Profits provide a safety margin against unexpected costs,
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provide resources to replace buildings and equipment, and to expand and improve services.
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1-9. , A Federalgovernment (see text Figure 1-1)
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 Individualincome taxes ,A




 Socialinsurance taxes ,A




 Corporate income tax ,A ,A




State and localgovernment (see text Figure 1-4)
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 Salesand gross receipts tax ,A ,A ,A ,A




 Federalgovernment
 Propertytaxes
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Healthsector (see text Figure 1-6) ,A ,A ,A , A ,A




 Privateinsurance
 Medicare
 Medicaid
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Not-for-profit sector (see text) , A ,A ,A




 Privatepayments forgoodsand services ,A ,A ,A ,A




 Government paymentsforgoodsandservices ,A ,A ,A ,A




 Donations

1-10. Federal government spending exceeded $6 trillion in 2020 and state and local government
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spending was more than $3 trillion in 2018. In contrast, the GDP was $21 trillion in 2020. For more
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up to date information, examine the statistical tables of the most recent Economic Report of the
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President, which is available online.
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1-11. The reported surplus includes both on and off budget items. Social security taxes represent an
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off budget item that until recently raised more revenue than was spent
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on social security payments.
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, Chapter 3: Additional
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Budgeting

The surplus in this area offset other government losses, and even resulted in an overall surplus for
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the federal government. This is no longer the case, and, over time, trust fund resources will be
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used up to provide benefits. As the federal government will not have access to the excess
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resources fromsocial security, it will have to borrow and increase the total level of federal debt,
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unless revenues orspending are changed.
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1-12. Sometimes gifts come with strings attached. If the conditions of the gift create a burden that the
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organization does not want to accept, or somehow requires the organization to work in opposition
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to its mission, it might turn down the gift.
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1-13. The World Bank has defined NGOs as "private organizations that pursue activities to relieve
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suffering, promote the interests of the poor, protect the environment, provide basic social
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services, or undertake community development" (World Bank Operational Directive 14.70).
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NGOs are quite similar to the not-for-profit organizations. They are primarily mission-focused
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rather than profit- focused. NGOs fall into three main categories: community-based, national,
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and international.
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PLANNING
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2-1. Planning helps the organization by causing its employees to think ahead and anticipate change.
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This is done by establishing specific goals and objectives, communicating those objectives to
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the individuals who must achieve them, forecasting future events, developing alternatives,
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selecting from among alternatives, and coordinating activities. The activities are summarized in a
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document called a budget. The budget describes what we hope to achieve and the resources that
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willbe usedto carryout the organization‘s activities.
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2-2. The organization‘s mission represents its reason for existence. For public, health, and not-for-
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profit organizations, finances often become a means to an end, rather than the end itself. This
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mission cannot solely be making profits. Financial management must help balance the focus
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on profit with the public service elements ofthe organization‘s mission.
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2-3. Strategic plans translate the mission of the organization into an approach or set of approaches that
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will be used to accomplish the mission, and a broad set of goals that need to be attained to
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achieve the mission. Strategic plans set the organization‘s long-term direction. They often
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