SOLUTIONS MANUAL for Financial Management for Public Health, and Not-for-Profit Organizations 7th Edition by Steven Finkler, Thad Calabrese, (Complete 15 Chapters)

Instructor’s62Manual62for62Financial62 Management62 for62Public,62Health,62and62Not-for-
Profit62Organizations1,



SOLUTIONS MANUAL for Financial Management for Public
Health, and Not-for-Profit Organizations 7th Edition by
Steven Finkler, Thad Calabrese, (Complete 15 Chapters)

,Chapter623:62 Additional62 Budgeting62 Conc 3-2
epts

INTRODUCTION
Chapter 1 62
TO
FINANCIALM 6
2



ANAGEMENT
Questions62for62Discussion

1-
1.62Financial62management62is62the62subset62of62management62that62focuses62on62generating62financi
al62information62that62can62improve62decisions.62The62decisions62are62oriented62toward62achieving62th
e62various62goals62of62the62organization62while62maintaining62a62satisfactory62financial62situation.62Fina
ncial62management62encompasses62the62broad62areas62of62accounting62and62finance.

1-2.62In62proprietary,62or62for-
profit,62organizations,62an62underlying62goal62is62to62maximize62the62wealth62of62the62owners62of62the62
organization.

1-
3.62In62public62service62organizations,62decisions62are62oriented62toward62achieving62the62various62go
als62of62the62organization62while62maintaining62a62satisfactory62financial62situation.

1-
4.62Accounting62is62a62system62for62keeping62track62of62the62financial62status62of62an62organization62an
d62the62financial62results62of62its62activities.62It62has62often62been62referred62to62as62the62language62of62
business.62The62vocabulary62used62by62accounting62is62the62language62of62nonbusiness62organizations
62as62well.



1-
5.62Accounting62is62subdivided62into62two62major62areas:62managerial62accounting62and62financial62ac
counting.62Managerial62accounting62relates62to62generating62any62financial62information62that62mana
gers62can62use62to62improve62the62future62results62of62the62organization.62This62includes62techniques62
designed62to62generate62any62financial62data62that62might62help62managers62make62more62effective62d
ecisions.62Major62aspects62of62managerial62accounting62relate62to62making62financial62plans62for62the62or
ganization,62implementing62those62plans,62and62then62working62to62ensure62that62the62plans62are62achie
ved.62Some62examples62of62managerial62accounting62include62preparing62annual62operating62budgets
,62generating62information62for62use62in62making62major62investment62decisions,62and62providing62the6
2data62needed62to62decide62whether62to62buy62or62lease62a62major62piece62of62equipment.62Financial62a

ccounting62provides62retrospective62information.62As62events62that62have62financial62implications62oc
cur62they62are62recorded62by62the62financial62accounting62system.62From62time62to62time62(usually62mont
hly,62quarterly,62or62annually),62the62recorded62data62are62summarized62and62reported62to62interested
62users.62The62users62include62both62internal62managers62and62people62outside62the62organization.62Tho

se62outsiders62include62those62who62have62lent62or62might62lend62money62to62the62organization62(credi
tors),62those62who62might62sell62things62to62the62organization62(called62suppliers62or62vendors),62and62o

, Instructor’s62Manual62for62Financial62 Management62 for62Public,62Health,62and62Not-for-
ther 62interested
Profit 62parties.
62 Organizations 1, 62These62interested62parties62may62include62those62with62a62particular62intere
st62in62public62service62organizations,62such62as62regulators,62legislators,62and62citizens.62Financial62repo
rts62provide62information62on62the62financial62status62of62the62organization62at62a62specific62point62in62ti
me,62as62well62as62reporting62the62past62results62of62the62organization‘s62operations62(i.e.,62how62well62i
t62 has62done62from62a62financial62viewpoint).

, Chapter623:62 Additional62 Budgeting62 Conc 3-4
epts

1-
6.62Finance62focuses62on62the62alternative62sources62and62uses62of62the62organization‘s62financial62res
ources.62Obtaining62funds62when62needed62from62appropriate62sources62and62the62deployment62of62r
esources62within62the62organization62fall62under62this62heading.62In62addition,62finance62involves62the62f
inancial62markets62(such62as62stock62and62bond62markets)62that62 provide62a62means62to62 generating62f
unds62for62organizations.

1-
7.62Yes.62Achieving62the62goals62of62the62organization62requires62financial62planning.62Financial62mana
gement62provides62information62for62managers62to62use62in62making62their62decisions.62It62helps62ma
nagers62by62providing62information62on62the62likely62financial62impact62of62each62proposed62alternativ
e.62It62also62provides62information62about62financial62stability,62efficiency,62and62effectiveness.

1-
8.62Clearly,62we62might62expect62some62public62service62organizations62that62are62proprietary,62such62
as62some62hospitals,62to62earn62profits.62But62what62about62other62public62service62organizations62suc
h62as62charities?62They62should62make62a62profit62as62well.62Profits62provide62a62safety62margin62against6
2unexpected62costs,62provide62resources62to62 replace62buildings62and62equipment,62 and62to62 expand62

and62improve62services.

1-9.6 2 Federal62government62(see62text62Figure621-1)
 Individual62income62taxes
 Social62insurance62taxes
 Corporate62income62tax

State62and62local62government62(see62text62Figure621-4)
 Sales62and62gross62receipts62tax
 Federal62government
 Property62taxes
 Individual62income62taxes

Health62sector62(see62text62Figure621-6)
 Private62insurance
 Medicare
 Medicaid
 Other62government62programs

Not-for-profit62 sector62(see62text)
 Private62payments62for62goods62and62services
 Government62payments62for62goods62and62services
 Donations

1-
10.62Federal62government62spending62exceeded62$662trillion62in62202062and62state62and62local62govern
ment62 spending62was62more62than62$362trillion62in622018.62In62contrast,62the62GDP62was62$2162trillion62i