Solution Manual for Financial Management for Public Health, and Not-for-Profit Organizations 7th Edition by Finkler, Calabrese & Smith Verified Chapters 1 - 15, Complete

Finkler,FinancialManagementforPublic,Health,andNot-for-ProfitOrganizations7e
©CQPress,2023

,Chapter3:AdditionalBudgetingConcepts 3-4


INTRODUCTION
Chapter1 TO
FINANCIALM
ANAGEMENT
QuestionsforDiscussion

1-
1.Financialmanagementisthesubsetofmanagementthatfocusesongeneratingfinancialinformationt
hatcanimprovedecisions.Thedecisionsareorientedtowardachievingthevariousgoalsoftheorganizati
onwhilemaintainingasatisfactoryfinancialsituation.Financialmanagementencompassesthebroadare
asofaccountingandfinance.

1-2.Inproprietary,orfor-
profit,organizations,anunderlyinggoalistomaximizethewealthoftheownersoftheorganization.

1-
3.Inpublicserviceorganizations,decisionsareorientedtowardachievingthevariousgoalsoftheorganiz
ationwhilemaintainingasatisfactoryfinancialsituation.

1-
4.Accountingisasystemforkeepingtrackofthefinancialstatusofanorganizationandthefinancialresults
ofitsactivities.Ithasoftenbeenreferredtoasthelanguageofbusiness.Thevocabularyusedbyaccountin
gisthelanguageofnonbusinessorganizationsaswell.

1-
5.Accountingissubdividedintotwomajorareas:managerialaccountingandfinancialaccounting.Mana
gerialaccountingrelatestogeneratinganyfinancialinformationthatmanagerscanusetoimprovethefut
ureresultsoftheorganization.Thisincludestechniquesdesignedtogenerateanyfinancialdatathatmigh
thelpmanagersmakemoreeffectivedecisions.Majoraspectsofmanagerialaccountingrelatetomakingfi
nancialplansfortheorganization,implementingthoseplans,andthenworkingtoensurethattheplansar
eachieved.Someexamplesofmanagerialaccountingincludepreparingannualoperatingbudgets,gener
atinginformationforuseinmakingmajorinvestmentdecisions,andprovidingthedataneededtodecide
whethertobuyorleaseamajorpieceofequipment.Financialaccountingprovidesretrospectiveinforma
tion.Aseventsthathavefinancialimplicationsoccurtheyarerecordedbythefinancialaccountingsystem.
Fromtimetotime(usuallymonthly,quarterly,orannually),therecordeddataaresummarizedandreport
edtointerestedusers.Theusersincludebothinternalmanagersandpeopleoutsidetheorganization.Tho
seoutsidersincludethosewhohavelentormightlendmoneytotheorganization(creditors),thosewhomi
ghtsellthingstotheorganization(calledsuppliersorvendors),andotherinterestedparties.Theseinteres
tedpartiesmayincludethosewithaparticularinterestinpublicserviceorganizations,suchasregulators,le
gislators,andcitizens.Financialreportsprovideinformationonthefinancialstatusoftheorganizationata
specificpointintime,aswellasreportingthepastresultsoftheorganization‘soperations(i.e.,howwellitha
sdonefromafinancialviewpoint).

, Finkler,FinancialManagementforPublic,Health,andNot-for-ProfitOrganizations7e
©CQPress,2023
1-
6.Financefocusesonthealternativesourcesandusesoftheorganization‘sfinancialresources.Obtaining
fundswhenneededfromappropriatesourcesandthedeploymentofresourceswithintheorganizationf
allunderthisheading.Inaddition,financeinvolvesthefinancialmarkets(suchasstockandbondmarkets)
thatprovideameanstogeneratingfundsfororganizations.

1-
7.Yes.Achievingthegoalsoftheorganizationrequiresfinancialplanning.Financialmanagementprovide
sinformationformanagerstouseinmakingtheirdecisions.Ithelpsmanagersbyprovidinginformationo
nthelikelyfinancialimpactofeachproposedalternative.Italsoprovidesinformationaboutfinancialstabi
lity,efficiency,andeffectiveness.

1-
8.Clearly,wemightexpectsomepublicserviceorganizationsthatareproprietary,suchassomehospitals,
toearnprofits.Butwhataboutotherpublicserviceorganizationssuchascharities?Theyshouldmakeapr
ofitaswell.Profitsprovideasafetymarginagainstunexpectedcosts,provideresourcestoreplacebuildin
gsandequipment,andtoexpandandimproveservices.

1-9.Federalgovernment(seetextFigure1-1)
◼ Individualincometaxes
◼ Socialinsurancetaxes
◼ Corporateincometax

Stateandlocalgovernment(seetextFigure1-4)
◼ Salesandgrossreceiptstax
◼ Federalgovernment
◼ Propertytaxes
◼ Individualincometaxes

Healthsector(seetextFigure1-6)
◼ Privateinsurance
◼ Medicare
◼ Medicaid
◼ Othergovernmentprograms

Not-for-profitsector(seetext)
◼ Privatepaymentsforgoodsandservices
◼ Governmentpaymentsforgoodsandservices
◼ Donations

1-
10.Federalgovernmentspendingexceeded$6trillionin2020andstateandlocalgovernmentspendingw
asmorethan$3trillionin2018.Incontrast,theGDPwas$21trillionin2020.Formoreuptodateinformatio
n,examinethestatisticaltablesofthemostrecentEconomicReportofthePresident,whichisavailableonl
ine.

, Chapter3:AdditionalBudgetingConcepts 3-4

1-
11.Thereportedsurplusincludesbothonandoffbudgetitems.Socialsecuritytaxesrepresentanoffbudg
etitemthatuntilrecentlyraisedmorerevenuethanwasspentonsocialsecuritypayments.


Thesurplusinthisareaoffsetothergovernmentlosses,andevenresultedinanoverallsurplusforthefeder
algovernment.Thisisnolongerthecase,and,overtime,trustfundresourceswillbeuseduptoprovideben
efits.Asthefederalgovernmentwillnothaveaccesstotheexcessresourcesfromsocialsecurity,itwillhav
etoborrowandincreasethetotalleveloffederaldebt,unlessrevenuesorspendingarechanged.

1-
12.Sometimesgiftscomewithstringsattached.Iftheconditionsofthegiftcreateaburdenthattheorgani
zationdoesnotwanttoaccept,orsomehowrequirestheorganizationtoworkinoppositiontoitsmission,i
tmightturndownthegift.

1-
13.TheWorldBankhasdefinedNGOsas"privateorganizationsthatpursueactivitiestorelievesuffering,
promotetheinterestsofthepoor,protecttheenvironment,providebasicsocialservices,orundertakeco
mmunitydevelopment"(WorldBankOperationalDirective14.70).NGOsarequitesimilartothenot-for-
profitorganizations.Theyareprimarilymission-focusedratherthanprofit-
focused.NGOsfallintothreemaincategories:community-based,national,andinternational.




PLANNING
Chapter2 FOR
SUCCESS:B
UDGETING
QuestionsforDiscussion

2-
1.Planninghelpstheorganizationbycausingitsemployeestothinkaheadandanticipatechange.Thisis
donebyestablishingspecificgoalsandobjectives,communicatingthoseobjectivestotheindividualsw
homustachievethem,forecastingfutureevents,developingalternatives,selectingfromamongaltern
atives,andcoordinatingactivities.Theactivitiesaresummarizedinadocumentcalledabudget.Thebud
getdescribeswhatwehopetoachieveandtheresourcesthatwillbeusedtocarryouttheorganization‘s
activities.

2-2.Theorganization‘smissionrepresentsitsreasonforexistence.Forpublic,health,andnot-for-
profitorganizations,financesoftenbecomeameanstoanend,ratherthantheenditself.Thismissionca
nnotsolelybemakingprofits.Financialmanagementmusthelpbalancethefocusonprofitwiththepubl
icserviceelementsoftheorganization‘smission.