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

Instructor’s Manual for Financial Management for Public, Health, and Not-for-Profit Organizations1,
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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
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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
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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 management
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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 financial
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results of its activities. It has often been referred to as the language of business. The vocabulary
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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 any
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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 making
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major investment decisions, and providing the data needed to decide whether to buy or lease a
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major piece of equipment. Financial accounting provides retrospective information. As events that
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have financial implications occur they are recorded by the financial accounting system. From time to
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time (usually monthly, quarterly, or annually), the recorded data are summarized and reported to
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interested users. The users include both internal managers and people outside the organization.
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Those outsiders include those who have lent or might lend money to the organization (creditors),
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those who might sell things to the organization (called suppliers or vendors), and other interested
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parties. These interested parties may include those with a particular interest in public service
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organizations, such as regulators, legislators, and citizens. Financial reports provide information on
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the financial status of the organization at a specific point in time, as well as reporting the past results
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of the organization‘s operations (i.e., how well it has done from a financial viewpoint).
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, Instructor’s Manual for Financial Management for Public, Health, and Not-for-Profit Organizations1,
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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 as
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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 providing
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information on the likely financial impact of each proposed alternative. It also provides information
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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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Theyshould make a profit as well. Profits provide a safety margin against unexpected costs, provide
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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 x x



 Social insurance taxes x x




 Corporate income tax x x




State and local government (see text Figure 1-4)
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 Sales and gross receipts tax x x x x



 Federalgovernment 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
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spending was more than $3 trillion in 2018. In contrast, the GDP was $21 trillion in 2020. For more
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up to date information, examine the statistical tables of the most recent Economic Report of the
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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 off
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budget item that until recently raised more revenue than was spent on social security
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payments.
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, Chapter 3: Additional Budgeting Concepts
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The surplus in this area offset other government losses, and even resulted in an overall surplus for
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the federal government. This is no longer the case, and, over time, trust fund resources will be
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usedup to provide benefits. As the federal government will not have access to the excess resources
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from social security, it will have to borrow and increase the total level of federal debt, unless
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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 opposition
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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 services,
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or undertake community development" (World Bank Operational Directive 14.70). NGOs are
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quite similar to the not-for-profit organizations. They are primarily mission-focused rather than
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profit- focused. NGOs fall into three main categories: community-based, national, and
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international.
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PLANNING
Chapter 2 x
FOR
SUCCESS:B x




UDGETING
Questions for Discussion x x




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 the
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individuals who must achieve them, forecasting future events, developing alternatives, selecting
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from among alternatives, and coordinating activities. The activities are summarized in a document
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called a budget. The budget describes what we hope to achieve and the resources that will be
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usedto carry out the organization‘s activities.
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2-2. The organization‘s mission represents its reason for existence. For public, health, and not-for-
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profit organizations, finances often become a means to an end, rather than the end itself. This
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mission cannot solely be making profits. Financial management must help balance the focus on
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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 that
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will be used to accomplish the mission, and a broad set of goals that need to be attained to
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achieve the mission. Strategic plans set the organization‘s long-term direction. They often do not
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