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Solution Manual
f4
for Financial Management for Public Health, and Not-for-Profit
f4 f4 f4 f4 f4 f4 f4
f4 Organizations 7th Edition by Finkler, Calabrese & Smith Verified
f4 f4 f4 f4 f4 f4 f4 f4
f4Chapters 1 - 15, Complete
f4 f4 f4 f4
, Chapter1: INTRODUCTION TO FINANCIAL MANAGEMENT f4 f4 f4 f4 f4
Questions for Discussion f4 f4
1-1. Financial management is the subset of management that focuses on generating financial information that
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can improve decisions. The decisions are oriented toward achieving the various goals of the organization
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while maintaining a satisfactory financial situation. Financial management encompasses the broad areas of
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
accounting and finance.
f4 f4 f4
1-2. In proprietary, or for-profit, organizations, an underlying goal is to maximize the wealth of the owners of
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
the organization.
f4 f4
1-3. In public service organizations, decisions are oriented toward achieving the various goals of the
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
organization while maintaining a satisfactory financial situation.
f4 f4 f4 f4 f4 f4 f4
1-4. Accounting is a system for keeping track of the financial status of an organization and the financial
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
results of its activities. It has often been referred to as the language of business. The vocabulary used by
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
accounting is the language of nonbusiness organizations as well.
f4 f4 f4 f4 f4 f4 f4 f4 f4
1-5. Accounting is subdivided into two major areas: managerial accounting and financial accounting.
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
Managerial accounting relates to generating any financial information that managers can use to improve
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
the future results of the organization. This includes techniques designed to generate any financial data that
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
might help managers make more effective decisions. Major aspects of managerial accounting relate to
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
making financial plans for the organization, implementing those plans, and then working to ensure that the
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
plans are achieved. Some examples of managerial accounting include preparing annual operating budgets,
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
generating information for use in making major investment decisions, and providing the data needed to
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
decide whether to buy or lease a major piece of equipment. Financial accounting provides retrospective
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
information. As events that have financial implications occur they are recorded by the financial accounting
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
system. From time to time (usually monthly, quarterly, or annually), the recorded data are summarized and
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
reported to interested users. The users include both internal managers and people outside the organization.
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
Those outsiders include those who have lent or might lend money to the organization (creditors), those who
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
might sell things to the organization (called suppliers or vendors), and other interested parties. These
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
interested parties may include those with a particular interest in public service organizations, such as
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
regulators, legislators, and citizens. Financial reports provide information on the financial status of the
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
organization at a specific point in time, as well as reporting the past results of the organization‗s operations
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
(i.e., how well it has done from a financial viewpoint).
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
1-6. Finance focuses on the alternative sources and uses of the organization‗s financial resources.
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
Obtaining funds when needed from appropriate sources and the deployment of resources within the
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
organization fall under this heading. In addition, finance involves the financial markets (such as stock and
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
1|P a g e f4 f4 f4 f4 f4
,bond markets) that provide a means to generating funds for organizations.
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
2|P a g e
f4 f4 f4 f4 f4
, 1-7. Yes. Achieving the goals of the organization requires financial planning. Financial management
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
provides information for managers to use in making their decisions. It helps managers by providing
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
information on the likely financial impact of each proposed alternative. It also provides information about
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
financial stability, efficiency, and effectiveness.
f4 f4 f4 f4 f4
1-8. Clearly, we might expect some public service organizations that are proprietary, such as some hospitals,
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
to earn profits. But what about other public service organizations such as charities? They should make a profit
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
as well. Profits provide a safety margin against unexpected costs, provide resources to replace buildings and
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
equipment, and to expand and improve services.
f4 f4 f4 f4 f4 f4 f4
1-9.Federal government (see text Figure1-1)
f4 f4 f4 f4 f4 f4
f4 Individual income taxes f4 f4
Social insurance taxes f4 f4
f4 Corporate income tax f4 f4
State andlocal government(see text Figure1-4)
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f4 Sales and gross receipts taxf4 f4 f4 f4
Federal government f4
f4 Property taxes f4
f4 Individualincome taxes f4 f4
Health sector(see text Figure1-6)
f4 f4 f4 f4 f4
f4 Private insurance f4
f4 Medicare
Medicaid
Other government programs f4 f4
Not-for-profit sector (see text) f4 f4 f4
Private payments for goods and services f4 f4 f4 f4 f4
f4 Government payments forgoodsand services f4 f4 f4 f4 f4
3|P a g e
f4 f4 f4 f4 f4
Solution Manual
f4
for Financial Management for Public Health, and Not-for-Profit
f4 f4 f4 f4 f4 f4 f4
f4 Organizations 7th Edition by Finkler, Calabrese & Smith Verified
f4 f4 f4 f4 f4 f4 f4 f4
f4Chapters 1 - 15, Complete
f4 f4 f4 f4
, Chapter1: INTRODUCTION TO FINANCIAL MANAGEMENT f4 f4 f4 f4 f4
Questions for Discussion f4 f4
1-1. Financial management is the subset of management that focuses on generating financial information that
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
can improve decisions. The decisions are oriented toward achieving the various goals of the organization
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
while maintaining a satisfactory financial situation. Financial management encompasses the broad areas of
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
accounting and finance.
f4 f4 f4
1-2. In proprietary, or for-profit, organizations, an underlying goal is to maximize the wealth of the owners of
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
the organization.
f4 f4
1-3. In public service organizations, decisions are oriented toward achieving the various goals of the
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
organization while maintaining a satisfactory financial situation.
f4 f4 f4 f4 f4 f4 f4
1-4. Accounting is a system for keeping track of the financial status of an organization and the financial
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
results of its activities. It has often been referred to as the language of business. The vocabulary used by
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
accounting is the language of nonbusiness organizations as well.
f4 f4 f4 f4 f4 f4 f4 f4 f4
1-5. Accounting is subdivided into two major areas: managerial accounting and financial accounting.
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
Managerial accounting relates to generating any financial information that managers can use to improve
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
the future results of the organization. This includes techniques designed to generate any financial data that
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
might help managers make more effective decisions. Major aspects of managerial accounting relate to
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
making financial plans for the organization, implementing those plans, and then working to ensure that the
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
plans are achieved. Some examples of managerial accounting include preparing annual operating budgets,
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
generating information for use in making major investment decisions, and providing the data needed to
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
decide whether to buy or lease a major piece of equipment. Financial accounting provides retrospective
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
information. As events that have financial implications occur they are recorded by the financial accounting
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
system. From time to time (usually monthly, quarterly, or annually), the recorded data are summarized and
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
reported to interested users. The users include both internal managers and people outside the organization.
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
Those outsiders include those who have lent or might lend money to the organization (creditors), those who
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
might sell things to the organization (called suppliers or vendors), and other interested parties. These
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
interested parties may include those with a particular interest in public service organizations, such as
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
regulators, legislators, and citizens. Financial reports provide information on the financial status of the
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
organization at a specific point in time, as well as reporting the past results of the organization‗s operations
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
(i.e., how well it has done from a financial viewpoint).
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
1-6. Finance focuses on the alternative sources and uses of the organization‗s financial resources.
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
Obtaining funds when needed from appropriate sources and the deployment of resources within the
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
organization fall under this heading. In addition, finance involves the financial markets (such as stock and
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
1|P a g e f4 f4 f4 f4 f4
,bond markets) that provide a means to generating funds for organizations.
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
2|P a g e
f4 f4 f4 f4 f4
, 1-7. Yes. Achieving the goals of the organization requires financial planning. Financial management
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
provides information for managers to use in making their decisions. It helps managers by providing
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
information on the likely financial impact of each proposed alternative. It also provides information about
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
financial stability, efficiency, and effectiveness.
f4 f4 f4 f4 f4
1-8. Clearly, we might expect some public service organizations that are proprietary, such as some hospitals,
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
to earn profits. But what about other public service organizations such as charities? They should make a profit
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
as well. Profits provide a safety margin against unexpected costs, provide resources to replace buildings and
f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4 f4
equipment, and to expand and improve services.
f4 f4 f4 f4 f4 f4 f4
1-9.Federal government (see text Figure1-1)
f4 f4 f4 f4 f4 f4
f4 Individual income taxes f4 f4
Social insurance taxes f4 f4
f4 Corporate income tax f4 f4
State andlocal government(see text Figure1-4)
f4 f4 f4 f4 f4 f4 f4
f4 Sales and gross receipts taxf4 f4 f4 f4
Federal government f4
f4 Property taxes f4
f4 Individualincome taxes f4 f4
Health sector(see text Figure1-6)
f4 f4 f4 f4 f4
f4 Private insurance f4
f4 Medicare
Medicaid
Other government programs f4 f4
Not-for-profit sector (see text) f4 f4 f4
Private payments for goods and services f4 f4 f4 f4 f4
f4 Government payments forgoodsand services f4 f4 f4 f4 f4
3|P a g e
f4 f4 f4 f4 f4
