Instructor’s Manual for Financial Management for Public, Health, and Not-for-Profit Organizations1,
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 Concepts 3-2
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
encompassesthe 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).
, Instructor’s Manual for Financial Management for Public, Health, and Not-for-Profit Organizations1,
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
spendingwas 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.
, Chapter 3: Additional Budgeting Concepts 3-4
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 orspending 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 usedto 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
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 Concepts 3-2
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
encompassesthe 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).
, Instructor’s Manual for Financial Management for Public, Health, and Not-for-Profit Organizations1,
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
spendingwas 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.
, Chapter 3: Additional Budgeting Concepts 3-4
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 orspending 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 usedto 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
