SOLUTION MANUAL
FOR FINANCIAL
MANAGEMENT FOR
PUBLIC, HEALTH,
AND NOT-FOR-
PROFIT
ORGANIZATIONS
ND
2 EDITION BY
STEVEN A. FINKLER
LATEST UPDATE A+
,CHAPTER 01
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 Encompasses The 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).
,
, Chapter 3: Additional Budgeting Concepts 3-2
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 Spending Was 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.
FOR FINANCIAL
MANAGEMENT FOR
PUBLIC, HEALTH,
AND NOT-FOR-
PROFIT
ORGANIZATIONS
ND
2 EDITION BY
STEVEN A. FINKLER
LATEST UPDATE A+
,CHAPTER 01
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 Encompasses The 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).
,
, Chapter 3: Additional Budgeting Concepts 3-2
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 Spending Was 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.
