Instructor’s Manual for Financial Management for Public, Health, and Not-for-
!x !x !x !x !x !x !x !x !x
Profit Organizations1,
!x
SOLUTIONS MANUAL for Financial Management for Public He
!x !x !x !x !x !x !x
alth, and Not-for-
!x !x
Profit Organizations 7th Edition by Steven Finkler, Thad Calabr
!x !x !x !x !x !x !x !x
ese, (Complete 15 Chapters)
!x !x !x
,Chapter 3: Additional Budgeting Concep
!x !x !x !x 3-2
ts
INTRODUCTION
Chapter 1 !x
TO
FINANCIALM !x
ANAGEMENT
Questions for Discussion !x !x
1-
1. Financial management is the subset of management that focuses on generating financial infor
!x !x !x !x !x !x !x !x !x !x !x !x !x
mationthat can improve decisions. The decisions are oriented toward achieving the various goals
!x !x !x !x !x !x !x !x !x !x !x !x !x !
of the organization while maintaining a satisfactory financial situation. Financial management enc
x !x !x !x !x !x !x !x !x !x !x !x
ompassesthe broad areas of accounting and finance. !x !x !x !x !x !x !x
1-2. In proprietary, or for-
!x !x !x !x
profit, organizations, an underlying goal is to maximize the wealth of the owners of the organizat
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
ion.
1-
3. In public service organizations, decisions are oriented toward achieving the various goals of th
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
e organization while maintaining a satisfactory financial situation.
!x !x !x !x !x !x !x
1-
4. Accounting is a system for keeping track of the financial status of an organization and the fina
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
ncial results of its activities. It has often been referred to as the language of business. The vocab
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
ulary used by accounting is the language of nonbusiness organizations as well.
!x !x !x !x !x !x !x !x !x !x !x
1-
5. Accounting is subdivided into two major areas: managerial accounting and financial accountin
!x !x !x !x !x !x !x !x !x !x !x !x
g. Managerial accounting relates to generating any financial information that managers can use t
!x !x !x !x !x !x !x !x !x !x !x !x !x
o improve the future results of the organization. This includes techniques designed to generate a
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
ny financial data that might help managers make more effective decisions. Major aspects of mana
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
gerialaccounting relate to making financial plans for the organization, implementing those plans, a
!x !x !x !x !x !x !x !x !x !x !x !x !x
nd thenworking to ensure that the plans are achieved. Some examples of managerial accounting
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
include preparing annual operating budgets, generating information for use in making major inve
!x !x !x !x !x !x !x !x !x !x !x !x
stment decisions, and providing the data needed to decide whether to buy or lease a major piec
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
e of equipment. Financial accounting provides retrospective information. As events that have fin
!x !x !x !x !x !x !x !x !x !x !x !x
ancial implications occur they are recorded by the financial accounting system. From time to time (
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
usuallymonthly, quarterly, or annually), the recorded data are summarized and reported to inter
!x !x !x !x !x !x !x !x !x !x !x !x !x
ested users.The users include both internal managers and people outside the organization. Thos
!x !x !x !x !x !x !x !x !x !x !x !x !x
e outsiders include those who have lent or might lend money to the organization (creditors), tho
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
se who might sell things to the organization (called suppliers or vendors), and other interested p
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
arties. These interested parties may include those with a particular interest in public service organ
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
izations, such asregulators, legislators, and citizens. Financial reports provide information on the
!x !x !x !x !x !x !x !x !x !x !x !x !x
, Instructor’s Manual for Financial Management for Public, Health, and Not-for-
!x !x !x !x !x !x !x !x !x
financial status of the1, organization at a specific point in time, as well as reporting the past results
Profit Organizations
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
of the organization‘s operations (i.e., how well it has done from a financial viewpoint).
!x !x !x !x !x !x !x !x !x !x !x !x !x
, Chapter 3: Additional Budgeting Concep
!x !x !x !x 3-4
ts
1-
6. Finance focuses on the alternative sources and uses of the organization‘s financial resources.
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
Obtaining funds when needed from appropriate sources and the deployment of resources within
!x !x !x !x !x !x !x !x !x !x !x !x !
theorganization fall under this heading. In addition, finance involves the financial markets (such
x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
as stock and bond markets) that provide a means to generating funds for organizations.
!x !x !x !x !x !x !x !x !x !x !x !x !x
1-
7. Yes. Achieving the goals of the organization requires financial planning. Financial management
!x !x !x !x !x !x !x !x !x !x !x !x !
xprovides information for managers to use in making their decisions. It helps managers by provid
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
ing information on the likely financial impact of each proposed alternative. It also provides infor
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
mation about financial stability, efficiency, and effectiveness.
!x !x !x !x !x !x
1-
8. Clearly, we might expect some public service organizations that are proprietary, such as some
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
hospitals, to earn profits. But what about other public service organizations such as charities? Th
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
eyshould make a profit as well. Profits provide a safety margin against unexpected costs, provide
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !
resources to replace buildings and equipment, and to expand and improve services.
x !x !x !x !x !x !x !x !x !x !x !x
1-9. Federal government (see text Figure 1-1)
! x !x !x !x !x !x
Individual income taxes !x !x
Social insurance taxes !x !x
Corporate income tax !x !x
State and local government (see text Figure 1-4)
!x !x !x !x !x !x !x
Sales and gross receipts tax !x !x !x !x
Federal government !x
Property taxes !x
Individual income taxes !x !x
Health sector (see text Figure 1-6)
!x !x !x !x !x
Private insurance !x
Medicare
Medicaid
Other government programs !x !x
Not-for-profit sector (see text) !x !x !x
Private payments for goods and services !x !x !x !x !x
Government payments for goods and services !x !x !x !x !x
Donations
1-
10. Federal government spending exceeded $6 trillion in 2020 and state and local government spe
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
ndingwas more than $3 trillion in 2018. In contrast, the GDP was $21 trillion in 2020. For more u
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
p to date information, examine the statistical tables of the most recent Economic Report of the
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
President, which is available online. !x !x !x !x
!x !x !x !x !x !x !x !x !x
Profit Organizations1,
!x
SOLUTIONS MANUAL for Financial Management for Public He
!x !x !x !x !x !x !x
alth, and Not-for-
!x !x
Profit Organizations 7th Edition by Steven Finkler, Thad Calabr
!x !x !x !x !x !x !x !x
ese, (Complete 15 Chapters)
!x !x !x
,Chapter 3: Additional Budgeting Concep
!x !x !x !x 3-2
ts
INTRODUCTION
Chapter 1 !x
TO
FINANCIALM !x
ANAGEMENT
Questions for Discussion !x !x
1-
1. Financial management is the subset of management that focuses on generating financial infor
!x !x !x !x !x !x !x !x !x !x !x !x !x
mationthat can improve decisions. The decisions are oriented toward achieving the various goals
!x !x !x !x !x !x !x !x !x !x !x !x !x !
of the organization while maintaining a satisfactory financial situation. Financial management enc
x !x !x !x !x !x !x !x !x !x !x !x
ompassesthe broad areas of accounting and finance. !x !x !x !x !x !x !x
1-2. In proprietary, or for-
!x !x !x !x
profit, organizations, an underlying goal is to maximize the wealth of the owners of the organizat
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
ion.
1-
3. In public service organizations, decisions are oriented toward achieving the various goals of th
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
e organization while maintaining a satisfactory financial situation.
!x !x !x !x !x !x !x
1-
4. Accounting is a system for keeping track of the financial status of an organization and the fina
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
ncial results of its activities. It has often been referred to as the language of business. The vocab
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
ulary used by accounting is the language of nonbusiness organizations as well.
!x !x !x !x !x !x !x !x !x !x !x
1-
5. Accounting is subdivided into two major areas: managerial accounting and financial accountin
!x !x !x !x !x !x !x !x !x !x !x !x
g. Managerial accounting relates to generating any financial information that managers can use t
!x !x !x !x !x !x !x !x !x !x !x !x !x
o improve the future results of the organization. This includes techniques designed to generate a
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
ny financial data that might help managers make more effective decisions. Major aspects of mana
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
gerialaccounting relate to making financial plans for the organization, implementing those plans, a
!x !x !x !x !x !x !x !x !x !x !x !x !x
nd thenworking to ensure that the plans are achieved. Some examples of managerial accounting
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
include preparing annual operating budgets, generating information for use in making major inve
!x !x !x !x !x !x !x !x !x !x !x !x
stment decisions, and providing the data needed to decide whether to buy or lease a major piec
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
e of equipment. Financial accounting provides retrospective information. As events that have fin
!x !x !x !x !x !x !x !x !x !x !x !x
ancial implications occur they are recorded by the financial accounting system. From time to time (
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
usuallymonthly, quarterly, or annually), the recorded data are summarized and reported to inter
!x !x !x !x !x !x !x !x !x !x !x !x !x
ested users.The users include both internal managers and people outside the organization. Thos
!x !x !x !x !x !x !x !x !x !x !x !x !x
e outsiders include those who have lent or might lend money to the organization (creditors), tho
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
se who might sell things to the organization (called suppliers or vendors), and other interested p
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
arties. These interested parties may include those with a particular interest in public service organ
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
izations, such asregulators, legislators, and citizens. Financial reports provide information on the
!x !x !x !x !x !x !x !x !x !x !x !x !x
, Instructor’s Manual for Financial Management for Public, Health, and Not-for-
!x !x !x !x !x !x !x !x !x
financial status of the1, organization at a specific point in time, as well as reporting the past results
Profit Organizations
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
of the organization‘s operations (i.e., how well it has done from a financial viewpoint).
!x !x !x !x !x !x !x !x !x !x !x !x !x
, Chapter 3: Additional Budgeting Concep
!x !x !x !x 3-4
ts
1-
6. Finance focuses on the alternative sources and uses of the organization‘s financial resources.
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
Obtaining funds when needed from appropriate sources and the deployment of resources within
!x !x !x !x !x !x !x !x !x !x !x !x !
theorganization fall under this heading. In addition, finance involves the financial markets (such
x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
as stock and bond markets) that provide a means to generating funds for organizations.
!x !x !x !x !x !x !x !x !x !x !x !x !x
1-
7. Yes. Achieving the goals of the organization requires financial planning. Financial management
!x !x !x !x !x !x !x !x !x !x !x !x !
xprovides information for managers to use in making their decisions. It helps managers by provid
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
ing information on the likely financial impact of each proposed alternative. It also provides infor
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
mation about financial stability, efficiency, and effectiveness.
!x !x !x !x !x !x
1-
8. Clearly, we might expect some public service organizations that are proprietary, such as some
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
hospitals, to earn profits. But what about other public service organizations such as charities? Th
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
eyshould make a profit as well. Profits provide a safety margin against unexpected costs, provide
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !
resources to replace buildings and equipment, and to expand and improve services.
x !x !x !x !x !x !x !x !x !x !x !x
1-9. Federal government (see text Figure 1-1)
! x !x !x !x !x !x
Individual income taxes !x !x
Social insurance taxes !x !x
Corporate income tax !x !x
State and local government (see text Figure 1-4)
!x !x !x !x !x !x !x
Sales and gross receipts tax !x !x !x !x
Federal government !x
Property taxes !x
Individual income taxes !x !x
Health sector (see text Figure 1-6)
!x !x !x !x !x
Private insurance !x
Medicare
Medicaid
Other government programs !x !x
Not-for-profit sector (see text) !x !x !x
Private payments for goods and services !x !x !x !x !x
Government payments for goods and services !x !x !x !x !x
Donations
1-
10. Federal government spending exceeded $6 trillion in 2020 and state and local government spe
!x !x !x !x !x !x !x !x !x !x !x !x !x !x
ndingwas more than $3 trillion in 2018. In contrast, the GDP was $21 trillion in 2020. For more u
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
p to date information, examine the statistical tables of the most recent Economic Report of the
!x !x !x !x !x !x !x !x !x !x !x !x !x !x !x !x
President, which is available online. !x !x !x !x
