Instructor’s Manual for Financial Management for Public, Health, and Not-for-Profit
tv tv tv tv tv tv tv tv tv
Organizations1,
tv
SOLUTIONS MANUAL for Financial Management for Public
Health, and Not-for-Profit Organizations 7th Edition by
Steven Finkler, Thad Calabrese, (Complete 15 Chapters)
,Chapter 3: Additional Budgeting
tv tv tv 3-2
Concepts
tv
INTRODUCTION
Chapter 1 tv
TO
FINANCIALM tv
ANAGEMENT
Questions for Discussion tv tv
1-1. Financial management is the subset of management that focuses on generating financial
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information that 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 of the 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 satisfactory financial situation.
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1-4. Accounting is a system for keeping track of the financial status of an organization and the
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financial results of its activities. It has often been referred to as the language of business. The
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vocabulary used by accounting is the language of nonbusiness 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 they are recorded by the financial accounting system.
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From time to time (usually monthly, quarterly, or annually), the recorded data are summarized
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and reported to interested users. The users include both internal managers and people outside
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the 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 from a financial viewpoint).
tv tv tv tv tv tv tv
, Instructor’s Manual for Financial Management for Public, Health, and Not-for-Profit tv tv tv tv tv tv tv tv tv
Organizations1,
tv
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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the organization fall under this heading. In addition, finance involves the financial markets (such
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as 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 also
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provides information about financial stability, 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. Federal government (see text Figure 1-1)
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Individual income taxes tv tv
Social insurance taxes tv tv
Corporate income tax tv tv
State and local government (see text Figure 1-4)
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Sales and gross receipts tax tv tv tv tv
Federalgovernment tv
Property taxes tv
Individual income taxes tv tv
Health sector (see text Figure 1-6) tv tv tv tv tv
Private insurance tv
Medicare
Medicaid
Other government programs tv tv
Not-for-profit sector (see text) tv tv tv
Private payments for goods and services tv tv tv tv tv
Government payments for goods and services tv tv tv tv tv
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
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more up to date information, examine the statistical tables of the most recent Economic Report
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of the 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 on social
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security payments.
tv tv
, Chapter 3: Additional Budgeting
tv tv tv 3-4
Concepts
tv
The surplus in this area offset other government losses, and even resulted in an overall surplus
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for the federal government. This is no longer the case, and, over time, trust fund resources will
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
be used up to provide benefits. As the federal government will not have access to the excess
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
resources from social 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
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opposition 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.
tv tv
PLANNING
Chapter 2 tv
FOR
SUCCESS:B tv
UDGETING
Questions for Discussion tv tv
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
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a document called a budget. The budget describes what we hope to achieve and the resources
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that will be usedto carry out the organization‘s activities.
tv tv tv tv tv tv tv tv tv tv
2-2. The organization‘s mission represents its reason for existence. For public, health, and not-for-
tv tv tv tv tv tv tv tv tv tv tv tv tv
profit organizations, finances often become a means to an end, rather than the end itself. This
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
mission cannot solely be making profits. Financial management must help balance the focus
tv tv tv tv tv tv tv tv tv tv tv tv tv
on profit with the public service elements of the organization‘s mission.
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2-3. Strategic plans translate the mission of the organization into an approach or set of approaches
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that will be used to accomplish the mission, and a broad set of goals that need to be attained
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to achieve the mission. Strategic plans set the organization‘s long-term direction. They often
tv tv tv tv tv tv tv tv tv tv tv tv tv
do not tv tv
tv tv tv tv tv tv tv tv tv
Organizations1,
tv
SOLUTIONS MANUAL for Financial Management for Public
Health, and Not-for-Profit Organizations 7th Edition by
Steven Finkler, Thad Calabrese, (Complete 15 Chapters)
,Chapter 3: Additional Budgeting
tv tv tv 3-2
Concepts
tv
INTRODUCTION
Chapter 1 tv
TO
FINANCIALM tv
ANAGEMENT
Questions for Discussion tv tv
1-1. Financial management is the subset of management that focuses on generating financial
tv tv tv tv tv tv tv tv tv tv tv tv
information that can improve decisions. The decisions are oriented toward achieving the various
tv tv tv tv tv tv tv tv tv tv tv tv tv
goals of the organization while maintaining a satisfactory financial situation. Financial
tv tv tv tv tv tv tv tv tv tv tv
management encompassesthe broad areas of accounting and finance.
tv tv tv tv tv tv tv tv tv
1-2. In proprietary, or for-profit, organizations, an underlying goal is to maximize the wealth of the
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
owners of the organization.
tv tv tv tv
1-3. In public service organizations, decisions are oriented toward achieving the various goals of the
tv tv tv tv tv tv tv tv tv tv tv tv tv tv
organization while maintaining a satisfactory financial situation.
tv tv tv tv tv tv tv
1-4. Accounting is a system for keeping track of the financial status of an organization and the
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
financial results of its activities. It has often been referred to as the language of business. The
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
vocabulary used by accounting is the language of nonbusiness organizations as well.
tv tv tv tv tv tv tv tv tv tv tv tv
1-5. Accounting is subdivided into two major areas: managerial accounting and financial accounting.
tv tv tv tv tv tv tv tv tv tv tv tv
Managerial accounting relates to generating any financial information that managers can use to
tv tv tv tv tv tv tv tv tv tv tv tv tv
improve the future results of the organization. This includes techniques designed to generate
tv tv tv tv tv tv tv tv tv tv tv tv tv
any financial data that might help managers make more effective decisions. Major aspects of
tv tv tv tv tv tv tv tv tv tv tv tv tv tv
managerial accounting relate to making financial plans for the organization, implementing those
tv tv tv tv tv tv tv tv tv tv tv tv
plans, and then working to ensure that the plans are achieved. Some examples of managerial
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
accounting include preparing annual operating budgets, generating information for use in
tv tv tv tv tv tv tv tv tv tv tv
making major investment decisions, and providing the data needed to decide whether to buy or
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
lease a major piece of equipment. Financial accounting provides retrospective information. As
tv tv tv tv tv tv tv tv tv tv tv tv
events that have financial implications occur they are recorded by the financial accounting system.
tv tv tv tv tv tv tv tv tv tv tv tv tv tv
From time to time (usually monthly, quarterly, or annually), the recorded data are summarized
tv tv tv tv tv tv tv tv tv tv tv tv tv tv
and reported to interested users. The users include both internal managers and people outside
tv tv tv tv tv tv tv tv tv tv tv tv tv tv
the organization. Those outsiders include those who have lent or might lend money to the
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
organization (creditors), those who might sell things to the organization (called suppliers or
tv tv tv tv tv tv tv tv tv tv tv tv tv
vendors), and other interested parties. These interested parties may include those with a
tv tv tv tv tv tv tv tv tv tv tv tv tv
particular interest in public service organizations, such as regulators, legislators, and citizens.
tv tv tv tv tv tv tv tv tv tv tv tv
Financial reports provide information on the financial status of the organization at a specific
tv tv tv tv tv tv tv tv tv tv tv tv tv tv
point in time, as well as reporting the past results of the organization‘s operations (i.e., how well
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
it has done from a financial viewpoint).
tv tv tv tv tv tv tv
, Instructor’s Manual for Financial Management for Public, Health, and Not-for-Profit tv tv tv tv tv tv tv tv tv
Organizations1,
tv
1-6. Finance focuses on the alternative sources and uses of the organization‘s financial resources.
tv tv tv tv tv tv tv tv tv tv tv tv tv
Obtaining funds when needed from appropriate sources and the deployment of resources within
tv tv tv tv tv tv tv tv tv tv tv tv tv
the organization fall under this heading. In addition, finance involves the financial markets (such
tv tv tv tv tv tv tv tv tv tv tv tv tv tv
as stock and bond markets) that provide a means to generating funds for organizations.
tv tv tv tv tv tv tv tv tv tv tv tv tv tv
1-7. Yes. Achieving the goals of the organization requires financial planning. Financial management
tv tv tv tv tv tv tv tv tv tv tv tv
provides information for managers to use in making their decisions. It helps managers by
tv tv tv tv tv tv tv tv tv tv tv tv tv tv
providing information on the likely financial impact of each proposed alternative. It also
tv tv tv tv tv tv tv tv tv tv tv tv tv
provides information about financial stability, efficiency, and effectiveness.
tv tv tv tv tv tv tv tv
1-8. Clearly, we might expect some public service organizations that are proprietary, such as some
tv tv tv tv tv tv tv tv tv tv tv tv tv tv
hospitals, to earn profits. But what about other public service organizations such as charities?
tv tv tv tv tv tv tv tv tv tv tv tv tv tv
They should make a profit as well. Profits provide a safety margin against unexpected costs,
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
provide resources to replace buildings and equipment, and to expand and improve services.
tv tv tv tv tv tv tv tv tv tv tv tv tv
1-9. Federal government (see text Figure 1-1)
t v tv tv tv tv tv
Individual income taxes tv tv
Social insurance taxes tv tv
Corporate income tax tv tv
State and local government (see text Figure 1-4)
tv tv tv tv tv tv tv
Sales and gross receipts tax tv tv tv tv
Federalgovernment tv
Property taxes tv
Individual income taxes tv tv
Health sector (see text Figure 1-6) tv tv tv tv tv
Private insurance tv
Medicare
Medicaid
Other government programs tv tv
Not-for-profit sector (see text) tv tv tv
Private payments for goods and services tv tv tv tv tv
Government payments for goods and services tv tv tv tv tv
Donations
1-10. Federal government spending exceeded $6 trillion in 2020 and state and local government
tv tv tv tv tv tv tv tv tv tv tv tv tv
spending was more than $3 trillion in 2018. In contrast, the GDP was $21 trillion in 2020. For
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
more up to date information, examine the statistical tables of the most recent Economic Report
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
of the President, which is available online.
tv tv tv tv tv tv tv
1-11. The reported surplus includes both on and off budget items. Social security taxes represent an
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
off budget item that until recently raised more revenue than was spent on social
tv tv t v tv t v tv tv t v tv tv tv tv t v tv
security payments.
tv tv
, Chapter 3: Additional Budgeting
tv tv tv 3-4
Concepts
tv
The surplus in this area offset other government losses, and even resulted in an overall surplus
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
for the federal government. This is no longer the case, and, over time, trust fund resources will
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
be used up to provide benefits. As the federal government will not have access to the excess
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
resources from social security, it will have to borrow and increase the total level of federal debt,
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
unless revenues orspending are changed.
tv tv tv tv tv tv
1-12. Sometimes gifts come with strings attached. If the conditions of the gift create a burden that the
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
organization does not want to accept, or somehow requires the organization to work in
tv tv tv tv tv tv tv tv tv tv tv tv tv tv
opposition to its mission, it might turn down the gift.
tv tv tv tv tv tv tv tv tv tv
1-13. The World Bank has defined NGOs as "private organizations that pursue activities to relieve
tv tv tv tv tv tv tv tv tv tv tv tv tv tv
suffering, promote the interests of the poor, protect the environment, provide basic social
tv tv tv tv tv tv tv tv tv tv tv tv tv
services, or undertake community development" (World Bank Operational Directive 14.70).
tv tv tv tv tv tv tv tv tv tv
NGOs are quite similar to the not-for-profit organizations. They are primarily mission-focused
tv tv tv tv tv tv tv tv tv tv tv tv
rather than profit- focused. NGOs fall into three main categories: community-based, national,
tv tv tv tv t v tv tv tv tv tv tv tv
and international.
tv tv
PLANNING
Chapter 2 tv
FOR
SUCCESS:B tv
UDGETING
Questions for Discussion tv tv
2-1. Planning helps the organization by causing its employees to think ahead and anticipate change.
tv tv tv tv tv tv tv tv tv tv tv tv tv tv
This is done by establishing specific goals and objectives, communicating those objectives to
tv tv tv tv tv tv tv tv tv tv tv tv tv
the individuals who must achieve them, forecasting future events, developing alternatives,
tv tv tv tv tv tv tv tv tv tv tv
selecting from among alternatives, and coordinating activities. The activities are summarized in
tv tv tv tv tv tv tv tv tv tv tv tv
a document called a budget. The budget describes what we hope to achieve and the resources
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
that will be usedto carry out the organization‘s activities.
tv tv tv tv tv tv tv tv tv tv
2-2. The organization‘s mission represents its reason for existence. For public, health, and not-for-
tv tv tv tv tv tv tv tv tv tv tv tv tv
profit organizations, finances often become a means to an end, rather than the end itself. This
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
mission cannot solely be making profits. Financial management must help balance the focus
tv tv tv tv tv tv tv tv tv tv tv tv tv
on profit with the public service elements of the organization‘s mission.
tv tv tv tv tv tv tv tv tv tv tv
2-3. Strategic plans translate the mission of the organization into an approach or set of approaches
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
that will be used to accomplish the mission, and a broad set of goals that need to be attained
tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv tv
to achieve the mission. Strategic plans set the organization‘s long-term direction. They often
tv tv tv tv tv tv tv tv tv tv tv tv tv
do not tv tv
