Instructor’s Manual for Financial Management for Public, Health, and Not-for-
!m !m !m !m !m !m !m !m !m
Profit Organizations1,
!m
SOLUTIONS MANUAL for Financial Management for Public H
!m !m !m !m !m !m !m
ealth, and Not-for-
!m !m
Profit Organizations 7th Edition by Steven Finkler, Thad Cala
!m !m !m !m !m !m !m !m
brese, (Complete 15 Chapters)
!m !m !m
,Chapter 3: Additional Budgeting Conce
!m !m !m !m 3-2
pts
INTRODUCTION
Chapter 1 !m
TO
FINANCIALM !m
ANAGEMENT
Questions for Discussion !m !m
1-
1. Financial management is the subset of management that focuses on generating financial i
!m !m !m !m !m !m !m !m !m !m !m !m !m
nformationthat can improve decisions. The decisions are oriented toward achieving the vario
!m !m !m !m !m !m !m !m !m !m !m !m
us goals of the organization while maintaining a satisfactory financial situation. Financial mana
!m !m !m !m !m !m !m !m !m !m !m !m
gement encompassesthe broad areas of accounting and finance.
!m !m !m !m !m !m !m !m
1-2. In proprietary, or for-
!m !m !m !m
profit, organizations, an underlying goal is to maximize the wealth of the owners of the orga
!m !m !m !m !m !m !m !m !m !m !m !m !m !m !m
nization.
1-
3. In public service organizations, decisions are oriented toward achieving the various goals
!m !m !m !m !m !m !m !m !m !m !m !m !m
of the organization while maintaining a satisfactory financial situation.
!m !m !m !m !m !m !m !m
1-
4. Accounting is a system for keeping track of the financial status of an organization and the
!m !m !m !m !m !m !m !m !m !m !m !m !m !m !m !m !
mfinancial results of its activities. It has often been referred to as the language of business. T
!m !m !m !m !m !m !m !m !m !m !m !m !m !m !m !m
he vocabulary used by accounting is the language of nonbusiness organizations as well.
!m !m !m !m !m !m !m !m !m !m !m !m
1-
5. Accounting is subdivided into two major areas: managerial accounting and financial accou
!m !m !m !m !m !m !m !m !m !m !m !m
nting. Managerial accounting relates to generating any financial information that managers c
!m !m !m !m !m !m !m !m !m !m !m
an use to improve the future results of the organization. This includes techniques designed t
!m !m !m !m !m !m !m !m !m !m !m !m !m !m
o generate any financial data that might help managers make more effective decisions. Major
!m !m !m !m !m !m !m !m !m !m !m !m !m !
maspects of managerialaccounting relate to making financial plans for the organization, implem
!m !m !m !m !m !m !m !m !m !m !m !m
enting those plans, and thenworking to ensure that the plans are achieved. Some examples o
!m !m !m !m !m !m !m !m !m !m !m !m !m !m !m
f managerial accounting include preparing annual operating budgets, generating information f
!m !m !m !m !m !m !m !m !m !m
or use in making major investment decisions, and providing the data needed to decide whet
!m !m !m !m !m !m !m !m !m !m !m !m !m !m
her to buy or lease a major piece of equipment. Financial accounting provides retrospective i
!m !m !m !m !m !m !m !m !m !m !m !m !m !m
nformation. As events that have financial implications occur they are recorded by the financial
!m !m !m !m !m !m !m !m !m !m !m !m !m !
maccounting system. From time to time (usuallymonthly, quarterly, or annually), the recorded
!m !m !m !m !m !m !m !m !m !m !m !m !m
data are summarized and reported to interested users.The users include both internal manag
!m !m !m !m !m !m !m !m !m !m !m !m !m
ers and people outside the organization. Those outsiders include those who have lent or mig
!m !m !m !m !m !m !m !m !m !m !m !m !m !m
ht lend money to the organization (creditors), those who might sell things to the organizatio
!m !m !m !m !m !m !m !m !m !m !m !m !m !m
n (called suppliers or vendors), and other interested parties. These interested parties may incl
!m !m !m !m !m !m !m !m !m !m !m !m !m
ude those with a particular interest in public service organizations, such asregulators, legislato
!m !m !m !m !m !m !m !m !m !m !m !m !m
, Instructor’s Manual for Financial Management for Public, Health, and Not-for-
!m !m !m !m !m !m !m !m !m
rs,Profit
!mand citizens. Financial
Organizations
!m
!m 1, reports provide information on the financial status of the organizati
!m !m !m !m !m !m !m !m !m !m !m
on at a specific point in time, as well as reporting the past results of the organization‘s opera
!m !m !m !m !m !m !m !m !m !m !m !m !m !m !m !m !m
tions (i.e., how well it has done from a financial viewpoint).
!m !m !m !m !m !m !m !m !m !m
, Chapter 3: Additional Budgeting Conce
!m !m !m !m 3-4
pts
1-
6. Finance focuses on the alternative sources and uses of the organization‘s financial resourc
!m !m !m !m !m !m !m !m !m !m !m !m !m
es. Obtaining funds when needed from appropriate sources and the deployment of resources
!m !m !m !m !m !m !m !m !m !m !m !m !
mwithin theorganization fall under this heading. In addition, finance involves the financial mar
!m !m !m !m !m !m !m !m !m !m !m !m !m
kets (such as stock and bond markets) that provide a means to generating funds for organiz
!m !m !m !m !m !m !m !m !m !m !m !m !m !m !m
ations.
1-
7. Yes. Achieving the goals of the organization requires financial planning. Financial managem
!m !m !m !m !m !m !m !m !m !m !m !m
ent provides information for managers to use in making their decisions. It helps managers b
!m !m !m !m !m !m !m !m !m !m !m !m !m !m
y providing information on the likely financial impact of each proposed alternative. It also pr
!m !m !m !m !m !m !m !m !m !m !m !m !m !m
ovides information about financial stability, efficiency, and effectiveness.
!m !m !m !m !m !m !m
1-
8. Clearly, we might expect some public service organizations that are proprietary, such as s
!m !m !m !m !m !m !m !m !m !m !m !m !m !m
ome hospitals, to earn profits. But what about other public service organizations such as cha
!m !m !m !m !m !m !m !m !m !m !m !m !m !m
rities? Theyshould make a profit as well. Profits provide a safety margin against unexpected
!m !m !m !m !m !m !m !m !m !m !m !m !m !m !m
costs, provide resources to replace buildings and equipment, and to expand and improve ser
!m !m !m !m !m !m !m !m !m !m !m !m !m
vices.
1-9. Federal government (see text Figure 1-1)
! m !m !m !m !m !m
Individual income taxes !m !m
Social insurance taxes !m !m
Corporate income tax !m !m
State and local government (see text Figure 1-4)
!m !m !m !m !m !m !m
Sales and gross receipts tax !m !m !m !m
Federal government !m
Property taxes !m
Individual income taxes !m !m
Health sector (see text Figure 1-6)
!m !m !m !m !m
Private insurance !m
Medicare
Medicaid
Other government programs !m !m
Not-for-profit sector (see text) !m !m !m
Private payments for goods and services !m !m !m !m !m
Government payments for goods and services !m !m !m !m !m
Donations
1-
10. Federal government spending exceeded $6 trillion in 2020 and state and local government
!m !m !m !m !m !m !m !m !m !m !m !m !m !
mspendingwas more than $3 trillion in 2018. In contrast, the GDP was $21 trillion in 2020. Fo
!m !m !m !m !m !m !m !m !m !m !m !m !m !m !m !m !m
!m !m !m !m !m !m !m !m !m
Profit Organizations1,
!m
SOLUTIONS MANUAL for Financial Management for Public H
!m !m !m !m !m !m !m
ealth, and Not-for-
!m !m
Profit Organizations 7th Edition by Steven Finkler, Thad Cala
!m !m !m !m !m !m !m !m
brese, (Complete 15 Chapters)
!m !m !m
,Chapter 3: Additional Budgeting Conce
!m !m !m !m 3-2
pts
INTRODUCTION
Chapter 1 !m
TO
FINANCIALM !m
ANAGEMENT
Questions for Discussion !m !m
1-
1. Financial management is the subset of management that focuses on generating financial i
!m !m !m !m !m !m !m !m !m !m !m !m !m
nformationthat can improve decisions. The decisions are oriented toward achieving the vario
!m !m !m !m !m !m !m !m !m !m !m !m
us goals of the organization while maintaining a satisfactory financial situation. Financial mana
!m !m !m !m !m !m !m !m !m !m !m !m
gement encompassesthe broad areas of accounting and finance.
!m !m !m !m !m !m !m !m
1-2. In proprietary, or for-
!m !m !m !m
profit, organizations, an underlying goal is to maximize the wealth of the owners of the orga
!m !m !m !m !m !m !m !m !m !m !m !m !m !m !m
nization.
1-
3. In public service organizations, decisions are oriented toward achieving the various goals
!m !m !m !m !m !m !m !m !m !m !m !m !m
of the organization while maintaining a satisfactory financial situation.
!m !m !m !m !m !m !m !m
1-
4. Accounting is a system for keeping track of the financial status of an organization and the
!m !m !m !m !m !m !m !m !m !m !m !m !m !m !m !m !
mfinancial results of its activities. It has often been referred to as the language of business. T
!m !m !m !m !m !m !m !m !m !m !m !m !m !m !m !m
he vocabulary used by accounting is the language of nonbusiness organizations as well.
!m !m !m !m !m !m !m !m !m !m !m !m
1-
5. Accounting is subdivided into two major areas: managerial accounting and financial accou
!m !m !m !m !m !m !m !m !m !m !m !m
nting. Managerial accounting relates to generating any financial information that managers c
!m !m !m !m !m !m !m !m !m !m !m
an use to improve the future results of the organization. This includes techniques designed t
!m !m !m !m !m !m !m !m !m !m !m !m !m !m
o generate any financial data that might help managers make more effective decisions. Major
!m !m !m !m !m !m !m !m !m !m !m !m !m !
maspects of managerialaccounting relate to making financial plans for the organization, implem
!m !m !m !m !m !m !m !m !m !m !m !m
enting those plans, and thenworking to ensure that the plans are achieved. Some examples o
!m !m !m !m !m !m !m !m !m !m !m !m !m !m !m
f managerial accounting include preparing annual operating budgets, generating information f
!m !m !m !m !m !m !m !m !m !m
or use in making major investment decisions, and providing the data needed to decide whet
!m !m !m !m !m !m !m !m !m !m !m !m !m !m
her to buy or lease a major piece of equipment. Financial accounting provides retrospective i
!m !m !m !m !m !m !m !m !m !m !m !m !m !m
nformation. As events that have financial implications occur they are recorded by the financial
!m !m !m !m !m !m !m !m !m !m !m !m !m !
maccounting system. From time to time (usuallymonthly, quarterly, or annually), the recorded
!m !m !m !m !m !m !m !m !m !m !m !m !m
data are summarized and reported to interested users.The users include both internal manag
!m !m !m !m !m !m !m !m !m !m !m !m !m
ers and people outside the organization. Those outsiders include those who have lent or mig
!m !m !m !m !m !m !m !m !m !m !m !m !m !m
ht lend money to the organization (creditors), those who might sell things to the organizatio
!m !m !m !m !m !m !m !m !m !m !m !m !m !m
n (called suppliers or vendors), and other interested parties. These interested parties may incl
!m !m !m !m !m !m !m !m !m !m !m !m !m
ude those with a particular interest in public service organizations, such asregulators, legislato
!m !m !m !m !m !m !m !m !m !m !m !m !m
, Instructor’s Manual for Financial Management for Public, Health, and Not-for-
!m !m !m !m !m !m !m !m !m
rs,Profit
!mand citizens. Financial
Organizations
!m
!m 1, reports provide information on the financial status of the organizati
!m !m !m !m !m !m !m !m !m !m !m
on at a specific point in time, as well as reporting the past results of the organization‘s opera
!m !m !m !m !m !m !m !m !m !m !m !m !m !m !m !m !m
tions (i.e., how well it has done from a financial viewpoint).
!m !m !m !m !m !m !m !m !m !m
, Chapter 3: Additional Budgeting Conce
!m !m !m !m 3-4
pts
1-
6. Finance focuses on the alternative sources and uses of the organization‘s financial resourc
!m !m !m !m !m !m !m !m !m !m !m !m !m
es. Obtaining funds when needed from appropriate sources and the deployment of resources
!m !m !m !m !m !m !m !m !m !m !m !m !
mwithin theorganization fall under this heading. In addition, finance involves the financial mar
!m !m !m !m !m !m !m !m !m !m !m !m !m
kets (such as stock and bond markets) that provide a means to generating funds for organiz
!m !m !m !m !m !m !m !m !m !m !m !m !m !m !m
ations.
1-
7. Yes. Achieving the goals of the organization requires financial planning. Financial managem
!m !m !m !m !m !m !m !m !m !m !m !m
ent provides information for managers to use in making their decisions. It helps managers b
!m !m !m !m !m !m !m !m !m !m !m !m !m !m
y providing information on the likely financial impact of each proposed alternative. It also pr
!m !m !m !m !m !m !m !m !m !m !m !m !m !m
ovides information about financial stability, efficiency, and effectiveness.
!m !m !m !m !m !m !m
1-
8. Clearly, we might expect some public service organizations that are proprietary, such as s
!m !m !m !m !m !m !m !m !m !m !m !m !m !m
ome hospitals, to earn profits. But what about other public service organizations such as cha
!m !m !m !m !m !m !m !m !m !m !m !m !m !m
rities? Theyshould make a profit as well. Profits provide a safety margin against unexpected
!m !m !m !m !m !m !m !m !m !m !m !m !m !m !m
costs, provide resources to replace buildings and equipment, and to expand and improve ser
!m !m !m !m !m !m !m !m !m !m !m !m !m
vices.
1-9. Federal government (see text Figure 1-1)
! m !m !m !m !m !m
Individual income taxes !m !m
Social insurance taxes !m !m
Corporate income tax !m !m
State and local government (see text Figure 1-4)
!m !m !m !m !m !m !m
Sales and gross receipts tax !m !m !m !m
Federal government !m
Property taxes !m
Individual income taxes !m !m
Health sector (see text Figure 1-6)
!m !m !m !m !m
Private insurance !m
Medicare
Medicaid
Other government programs !m !m
Not-for-profit sector (see text) !m !m !m
Private payments for goods and services !m !m !m !m !m
Government payments for goods and services !m !m !m !m !m
Donations
1-
10. Federal government spending exceeded $6 trillion in 2020 and state and local government
!m !m !m !m !m !m !m !m !m !m !m !m !m !
mspendingwas more than $3 trillion in 2018. In contrast, the GDP was $21 trillion in 2020. Fo
!m !m !m !m !m !m !m !m !m !m !m !m !m !m !m !m !m
