Instructor’s Manual for Financial Management for Public, Health, and Not-for-
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Profit Organizations1,
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SOLUTIONS MANUAL for Financial Management for Public H
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alth, and Not-for-
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Profit Organizations 7th Edition by Steven Finkler, Thad Calab
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rese, (Complete 15 Chapters)
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,Chapter 3: Additional Budgeting Concept
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s
INTRODUCTION
Chapter 1 W
TO
FINANCIALM W
ANAGEMENT
Questions for Discussion W W
1-
1. Financial management is the subset of management that focuses on generating financial info
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rmation that can improve decisions. The decisions are oriented toward achieving the various go
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als of the organization while maintaining a satisfactory financial situation. Financial management
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encompasses the broad areas of accounting and finance. W W W W W W W
1-2. In proprietary, or for-
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profit, organizations, an underlying goal is to maximize the wealth of the owners of the organiz
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ation.
1-
3. In public service organizations, decisions are oriented toward achieving the various goals of t
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he 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 fin
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ancial results of its activities. It has often been referred to as the language of business. The voc
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abulary 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 accounti
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ng. Managerial accounting relates to generating any financial information that managers can us
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e to improve the future results of the organization. This includes techniques designed to gener
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ate any financial data that might help managers make more effective decisions. Major aspects o
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f managerial accounting relate to making financial plans for the organization, implementing those
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Wplans, and then working to ensure that the plans are achieved. Some examples of managerial a
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ccounting include preparing annual operating budgets, generating information for use in makin
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g major investment decisions, and providing the data needed to decide whether to buy or leas
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e a major piece of equipment. Financial accounting provides retrospective information. As even
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ts that have financial implications occur they are recorded by the financial accounting system. Fr
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om time to time (usually monthly, quarterly, or annually), the recorded data are summarized an
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d reported to interested users. The users include both internal managers and people outside th
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e organization. Those outsiders include those who have lent or might lend money to the organi
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zation (creditors), those who might sell things to the organization (called suppliers or vendors),
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and other interested parties. These interested parties may include those with a particular intere
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st in public service organizations, such as regulators, legislators, and citizens. Financial reports pr
W W W W W W W W W W W W W
, Instructor’s Manual for Financial Management for Public, Health, and Not-for-
W W W W W W W W W
ovide information
ProfitW W on1, the financial status of the organization at a specific point in time, as well a
Organizations W W W W W W W W W W W W W W W W
s reporting the past results of the organization‘s operations (i.e., how well it has done from a fi
W W W W W W W W W W W W W W W W W
nancial viewpoint).
W
, Chapter 3: Additional Budgeting Concept
W W W W 3-4
s
1-
6. Finance focuses on the alternative sources and uses of the organization‘s financial resources.
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WObtaining funds when needed from appropriate sources and the deployment of resources with
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in the organization fall under this heading. In addition, finance involves the financial markets (s
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uch as 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 managemen
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t provides information for managers to use in making their decisions. It helps managers by pro
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viding information on the likely financial impact of each proposed alternative. It also provides i
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nformation 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 som
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e hospitals, to earn profits. But what about other public service organizations such as charities?
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WThey should make a profit as well. Profits provide a safety margin against unexpected costs, pr
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ovide 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 W W
Social insurance taxes W W
Corporate income tax W W
State and local government (see text Figure 1-4)
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Sales and gross receipts tax W W W W
Federal government W
Property taxes W
Individual income taxes W W
Health sector (see text Figure 1-6)
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Private insurance W
Medicare
Medicaid
Other government programs W W
Not-for-profit sector (see text) W W W
Private payments for goods and services W W W W W
Government payments for goods and services W W W W W
Donations
1-
10. Federal government spending exceeded $6 trillion in 2020 and state and local government s
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pending was more than $3 trillion in 2018. In contrast, the GDP was $21 trillion in 2020. For mo
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re up to date information, examine the statistical tables of the most recent Economic Report of
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Wthe President, which is available online.
W W W W W
W W W W W W W W W
Profit Organizations1,
W
SOLUTIONS MANUAL for Financial Management for Public H
W W W W W W W
alth, and Not-for-
W W
Profit Organizations 7th Edition by Steven Finkler, Thad Calab
W W W W W W W W
rese, (Complete 15 Chapters)
W W W
,Chapter 3: Additional Budgeting Concept
W W W W 3-2
s
INTRODUCTION
Chapter 1 W
TO
FINANCIALM W
ANAGEMENT
Questions for Discussion W W
1-
1. Financial management is the subset of management that focuses on generating financial info
W W W W W W W W W W W W W
rmation that can improve decisions. The decisions are oriented toward achieving the various go
W W W W W W W W W W W W W
als of the organization while maintaining a satisfactory financial situation. Financial management
W W W W W W W W W W W W
encompasses the broad areas of accounting and finance. W W W W W W W
1-2. In proprietary, or for-
W W W W
profit, organizations, an underlying goal is to maximize the wealth of the owners of the organiz
W W W W W W W W W W W W W W W
ation.
1-
3. In public service organizations, decisions are oriented toward achieving the various goals of t
W W W W W W W W W W W W W W
he organization while maintaining a satisfactory financial situation.
W W W W W W W
1-
4. Accounting is a system for keeping track of the financial status of an organization and the fin
W W W W W W W W W W W W W W W W W
ancial results of its activities. It has often been referred to as the language of business. The voc
W W W W W W W W W W W W W W W W W
abulary used by accounting is the language of nonbusiness organizations as well.
W W W W W W W W W W W
1-
5. Accounting is subdivided into two major areas: managerial accounting and financial accounti
W W W W W W W W W W W W
ng. Managerial accounting relates to generating any financial information that managers can us
W W W W W W W W W W W W
e to improve the future results of the organization. This includes techniques designed to gener
W W W W W W W W W W W W W W
ate any financial data that might help managers make more effective decisions. Major aspects o
W W W W W W W W W W W W W W
f managerial accounting relate to making financial plans for the organization, implementing those
W W W W W W W W W W W W
Wplans, and then working to ensure that the plans are achieved. Some examples of managerial a
W W W W W W W W W W W W W W W
ccounting include preparing annual operating budgets, generating information for use in makin
W W W W W W W W W W W
g major investment decisions, and providing the data needed to decide whether to buy or leas
W W W W W W W W W W W W W W W
e a major piece of equipment. Financial accounting provides retrospective information. As even
W W W W W W W W W W W W
ts that have financial implications occur they are recorded by the financial accounting system. Fr
W W W W W W W W W W W W W W
om time to time (usually monthly, quarterly, or annually), the recorded data are summarized an
W W W W W W W W W W W W W W
d reported to interested users. The users include both internal managers and people outside th
W W W W W W W W W W W W W W
e organization. Those outsiders include those who have lent or might lend money to the organi
W W W W W W W W W W W W W W W
zation (creditors), those who might sell things to the organization (called suppliers or vendors),
W W W W W W W W W W W W W W
and other interested parties. These interested parties may include those with a particular intere
W W W W W W W W W W W W W
st in public service organizations, such as regulators, legislators, and citizens. Financial reports pr
W W W W W W W W W W W W W
, Instructor’s Manual for Financial Management for Public, Health, and Not-for-
W W W W W W W W W
ovide information
ProfitW W on1, the financial status of the organization at a specific point in time, as well a
Organizations W W W W W W W W W W W W W W W W
s reporting the past results of the organization‘s operations (i.e., how well it has done from a fi
W W W W W W W W W W W W W W W W W
nancial viewpoint).
W
, Chapter 3: Additional Budgeting Concept
W W W W 3-4
s
1-
6. Finance focuses on the alternative sources and uses of the organization‘s financial resources.
W W W W W W W W W W W W W
WObtaining funds when needed from appropriate sources and the deployment of resources with
W W W W W W W W W W W W
in the organization fall under this heading. In addition, finance involves the financial markets (s
W W W W W W W W W W W W W W
uch as stock and bond markets) that provide a means to generating funds for organizations.
W W W W W W W W W W W W W W
1-
7. Yes. Achieving the goals of the organization requires financial planning. Financial managemen
W W W W W W W W W W W W
t provides information for managers to use in making their decisions. It helps managers by pro
W W W W W W W W W W W W W W W
viding information on the likely financial impact of each proposed alternative. It also provides i
W W W W W W W W W W W W W W
nformation about financial stability, efficiency, and effectiveness.
W W W W W W
1-
8. Clearly, we might expect some public service organizations that are proprietary, such as som
W W W W W W W W W W W W W W
e hospitals, to earn profits. But what about other public service organizations such as charities?
W W W W W W W W W W W W W W
WThey should make a profit as well. Profits provide a safety margin against unexpected costs, pr
W W W W W W W W W W W W W W W
ovide resources to replace buildings and equipment, and to expand and improve services.
W W W W W W W W W W W W
1-9. Federal government (see text Figure 1-1)
W W W W W W
Individual income taxes W W
Social insurance taxes W W
Corporate income tax W W
State and local government (see text Figure 1-4)
W W W W W W W
Sales and gross receipts tax W W W W
Federal government W
Property taxes W
Individual income taxes W W
Health sector (see text Figure 1-6)
W W W W W
Private insurance W
Medicare
Medicaid
Other government programs W W
Not-for-profit sector (see text) W W W
Private payments for goods and services W W W W W
Government payments for goods and services W W W W W
Donations
1-
10. Federal government spending exceeded $6 trillion in 2020 and state and local government s
W W W W W W W W W W W W W W
pending was more than $3 trillion in 2018. In contrast, the GDP was $21 trillion in 2020. For mo
W W W W W W W W W W W W W W W W W W
re up to date information, examine the statistical tables of the most recent Economic Report of
W W W W W W W W W W W W W W W
Wthe President, which is available online.
W W W W W
