Financial Management for Public, Health and Not-for-Profit Organizations 5th edition Steven A. Finkler, Daniel L. Smith, Thad D. Calabrese, Robert M. Purtell - Solutions

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Answer the following questions about methods of accounting.On the accrual basis of accounting, revenues and support are recognized when an organization ________ an amount that it is likely to collect, and it recognizes expenses when it ________ a resource.2. Accrual-based expenses associated with
They paid Finn $45,000 during the year and owe $15,000. Finn uses donated, unskilled labor and free garage space at a local high school. Its only cost is for parts. Total parts cost $58,000 for the year. During that first year Finn paid its parts suppliers $52,000. It owes its suppliers the
The town prepares its operating budget following the unique rules of modified accrual accounting employed by governments. Under these rules expenses are recognized when the town receives goods or services and becomes legally obligated to pay for them. It does not matter if they have been used or
Local Hospital (LH) has decided that it would like to send nurses to a local supermarket to provide a free health screening for interested supermarket customers. The screening will consist of measuring the individual’s blood pressure and taking a drop of blood, which will immediately be tested
Traditionally, property tax revenues have been received in cash according to the following schedule: 40 percent in the first month following the billing date 20 percent in second month 10 percent in third month 10 percent in fourth month 8 percent in fifth month 5 percent in sixth month 7 percent
Select from the choices below to answer the following questions:a. Increase b. Decrease c. stay the same d. cannot tell from the information given 1. If the amount of uncollectible school taxes increases, the mill rate that citizens must pay on their school taxes will _________.2. If the value
Draft a quarterly cash budget for Zoo Extravaganza (ZE) for the first two quarters of the coming year. Use just the information in this problem. You know from past experience that not all of your revenue and support is collected when you earn it. Cash contributions are collected in the quarter
The advantage of a centralized approach to budgeting is that staff has more involvement in setting organizational priorities. True or false?
What are the two main categories of functional budgets? Why do you think this might be a useful way to budget?
Performance budgeting is concerned more with reducing costs than with monitoring outcomes. True or false?
Describe zero-based budgeting.
Which of the following is not true about zero-based budgeting?a. Generally more costly to prepareb. Reevaluates all program activities every yearc. Most commonly used budget methodd. Reduces “slack” in budgets
Many managers simply average historical data to get a forecast of future results. Is that approach adequate?
A carefully done computerized analysis should be sufficient for most forecasts. True or false? Why?
What do functional financial statements do?
Select from the following to answer questions 1 and 2.a. Zero-basedb. Formula c. Incremental d. Accruale. Capitalf. Flexible
1. If your boss, the town’s chief financial officer, told you that the town expected tax revenues to be 22 percent lower than last year and asked you to prepare decision packages to justify all of the town’s discretionary programs, you would use a(n) ____________ budget.2. To test the
Select from the following to answer questions 1 through 4.a. Zero-basedb. Formula c. Incremental d. Accruale. Capitalf. Flexible
1. If your boss told you to test this year’s budget for the impact of changes in expected client volume on your budgeted revenue and expenses, you would use a(n) ____________ budget.2. ____________ budgets focus on proposed investments in valuable, long-lived resources.3. Decision packages are
The Free Health Care Center (FH) charges each patient $5.50 (not quite free after all, but pretty close). Due to rising costs, the center has been forced to consider raising this charge to $6.00 or $6.50. If the price goes up, fewer people will come to the center for care. At a price of $6.00 only
When determining costs, which of the following factors will not be taken into account?a. The cost objective b. The relevant range of time c. The relevant range of volume d. Who is measuring the cost.e. Whether the person asking the question is inside or outside the organization
Relevant costs are those that change because of the action being considered or undertaken by an organization. Which of the following factors should be considered when determining which costs are relevant in a decision to expand an after-school reading program for neighborhood children?a. The
Marginal costs are not equal to variable costs when (indicate all that apply)a. The time frame for a decision is more than 1 yearb. There is a change in fixed costsc. There is excess capacityd. Some costs are outside an organizational unit making the decision
Select the best available answer to fill the blank. 1. We Give Gifts Foundation’s accounting manager prepares reports about the foundation’s grant making, investments, and general administrative activities. The cost of her salary and fringe benefits would be included as part of the
Consider the cost of service delivery for a public service organization. Match the correct term with its definition below.a. Average cost 257 4-15.b. Full cost c. Marginal cost 1. The direct cost and the indirect cost of service delivery equals its_________________.2. The total cost of service
Select the best choice from the following to answer questions 1 and 2. 1. An increase in service volume will have the following effects:a. Increase unit variable cost and decrease unit fixed costb. Unit variable cost remains constant and unit fixed cost remains constant c. Decrease unit
To break even, an organization’s _________________ must equal its _________________.a. Total revenues, fixed costsb. Total revenues, variable costsc. Total revenues, total costsd. Total revenues, total support
Answer the following questions about costs. 1. Whether a cost is considered to be a direct or indirect cost depends on (select the best choice)a. The cost objectiveb. Who is doing the analysisc. The time frame for the analysisd. Whether costs are inside or outside an organizational unit e. the
Answer the following questions about break-even analysis. 1. Break-even analysis for multiple products requires a _________________ approach.2. The contribution margin must be a positive number for the organization to have any chance of having a _______________________.3. The NYU Concert Band
Camp Hole-in-the-Wall provides children who have chronic medical conditions with 1-week summer vacations. The Camp owns a 500-acre facility in the Berkshire Mountains, where it brings the kids. The annual depreciation expense for the camp is $100,000. The Camp hires one counselor for every 10
Answer the following questions about the break-even analysis. 1. New City Day Care Center operates from Monday to Friday. It has fixed expenses of $5,000 per week and charges each child who attends the program $15 per day. It costs the Center $5 per day for supplies and snacks for each child.
Youth For America had annual total costs of $800,000 at a volume of 2,000 volunteers. The fixed costs for the year were $400,000.1. What are the total variable costs for the year?2. What would the total costs be if the volume increased by 10 percent?
Doctors Without Borders (DWB) operates health programs around the world. It has a central staff of 100 people who administer its worldwide programs. DWB’s central operation buys and distributes all of the supplies used in its various country operations. DWB’s country director for Afghanistan
Mike Shiau is the finance director for faculty research at Big and Prestigious University (BPU). The research division has an administrative staff that is responsible for managing the administrative aspects of all of BPU’s research grants. Faculty research is carried out in a dedicated research
Answer the following questions about break-even analysis. 1. Millbridge Day Care Center operates from Monday to Friday. It has fixed expenses of $18,000 per week and charges each child who attends the program $300 per week. It costs the center $30 per week for supplies and snacks for each
Millbridge Township provides a variety of summer recreation alternatives. You can belong to the town pool, play tennis, or play golf. Summer passes allowing residents to use these facilities are sold each year. Twenty-five percent of the season passes that are purchased are golf passes, 35 percent
Millbridge Ambulance Service has been considering consolidating its three locations into just two locations. The location they are considering closing currently costs $155,000 to operate. If the location is closed, the ambulances from that location would be moved to the other two locations. The
Do capital budgets have any impact on operating budgets?
What are the problems with the payback method?
Solve the following using a calculator or spreadsheet.a. If she can invest money at 5 percent compounded quarterly, how much must she invest today?b. Suppose that Morduch believes that Meals for the Homeless can put aside only $37,500 today to buy the new van in 3 years. However, she thinks that
Choose from the methods listed below to answer the following questions.a. Net present value b. Net present cost c. Annualized cost d. Break-evene. Internal rate of return f. Cost-benefit analysis 1. The Public Water Works Department (PWW) is trying to decide whether to replace the crumbling
At any interest rate above 0 percent, the future value of an investment will always be a. Less than the original amount invested b. Greater than the original amount investedc. Equal to the original amount invested
A stream of 60 monthly payments of $1,000 each is an example of a(n) _________.
If the net present value of the cash flows from an investment is greater than zero and you base your decision solely on financial considerations, you should _________ the investment. (Circle the correct answer.)a. Acceptb. Rejectc. Do nothing (not enough information) about
If compounding changes from quarterly to weekly for a $100 investment earning 8 percent per annum, the future value at the end of 5 years will (select from the answers below)a. Increase b. Decrease c. Stay the samed. Cannot tell from the information given
The internal rate of return is the discount rate that sets the _________ value of the _________ equal to the _________ value of the _________.
What are the various types of long-term debt?
What are government bonds.
If interest rates rise, the prices for outstanding bonds will (Choose one of the answers below.)a. Fall b. Risec. Stay the same.
Coupon bonds generally pay interest __________ and principal at the __________.
Initial offerings of bonds occur in a(n) __________ while resale of bonds occurs in a(n) __________.
Fifteen years ago, The Food Pantry bought a new building for $600,000. It borrowed $500,000 on a 30-year mortgage with a 6 percent fixed rate and monthly payments. The current outstanding balance on the mortgage is $355,000. Today, the organization can get a 15-year fixed-rate mortgage with an
Interest payments on bonds that make periodic interest payments are calculated by dividing the __________ by the number of __________ and multiplying by __________ of the bond.
The Town of Hill Valley is issuing a 30-year bond with a face value of $50,000,000 and a stated annual interest rate of 4 percent. The town will make interest payments twice a year. 1. Calculate the semiannual interest payment.2. Calculate how much Hill Valley will receive from the bond
Assume an organization could issue a zero coupon bond at an annual interest rate of 4 percent with semiannual compounding for 20 years. If it receives $2,264.45 for the bond, how much would it have to pay at the maturity date? 6-20. On January 1, 2016, Central City issued a 20-year serial bond to
What is meant by a risk/return trade-off?
Can just-in-time inventory work in public service organizations? Why or why not?
Accounts receivable represent.a. Amounts owed by the organization to outsiders b. Amounts owed to the organization by outsidersc. An operating expense d. A possible line item on an operating budget
Short-term debt refers toa. Money that the organization has just borrowed b. Money that must be repaid at some time in the next 12 months c. Money that has to be repaid at some time after the next 12 monthsd. A form of debt that only requires the repayment of interest during the coming year.
An accounts receivable aging schedule shows the _________ and _________ of an organization’s accounts receivable that have been outstanding for less than 30 days, 31–60 days, 61–90 days, and so on.
Working capital management focuses on making sure that an organization has sufficient resources to operate a. In accordance with its mission b. Over the next year c. Efficientlyd. Over the expected life of the organization.
Bills that have been sent out by an organization but not yet collected are referred to as _________.
Amounts that an organization owes to its suppliers, but has not yet paid, are referred to as a. Accounts receivable b. Bad debts c. Accounts payabled. Accrued expenses.
An inventory management system that relies primarily on physical counts of inventory is said to be using the a. Perpetual method b. Periodic methodc. Warehouse-control method.
Name two tools (techniques) that can be used by an organization to manage its accounts receivable.
Accounts payable are amounts owed by an organization that have not yet been paid. Name two specific types of accounts payable.
Meals for the Homeless usually experiences seasonality in its cash balances. In December, contributions from donors increase its cash balances, and then these balances are used throughout the following year. By the fall, Meals for the Homeless has a tight cash flow. It has a line of credit with its
What is an internal control system?
Which of the following is not a component of an internal control system:a. adequate documentation b. audit trail c. separation of duties d. none of the above are components of internal controle. a, b, and c are all components of an internal control system
How can outcomes be measured?
If we know that a variance is the result of an uncontrollable price increase for a supply item that we must have, do we need to investigate and make a report regarding the variance? Why or why not?
What is the essential issue on which flexible budget variance analysis is based?
Will all line items have a volume variance?
Answer the following questions about variance analysis. 1. Variances are differences between ____________ and ____________ revenues or expenses.2. The three factors involved in variance analysis are ____________, ____________ and ____________.
Burnham Elementary School spent $100,000 on textbooks for the fall 2016 semester. It had expected to have a total enrollment of 450 students who would each have needed four books at a cost of $65 each. What is the textbook expense variance? Is it favorable or unfavorable? Why?
Rob West is the director of Eyeglasses for the Poor (EP). EP receives donations of eyeglasses and recycles them for use by the nearsighted needy around the world. Sometimes the eyeglass frames are expensive designer frames that can be sold to raise operating funds for the organization. Rob is
Your investigation determines that in August he treated 7 type X patients with an average cost of $4,300 and 11 type Y patients with an average cost of $9,000. In September, he treated 8 type X patients and 10 type Y patients. Costs in September for his patients were $5,000 for type X and $8,700
Pam Crawford is the vice president of the HMO of Millbridge. The organization bills and collects premiums from employers for their employees who are enrolled as members of the HMO. In turn, it receives bills from hospitals and physicians for care they have given to its members. Pam is in charge of
What major change has occurred regarding the GAAP of conservatism?
Do CPAs allow errors to exist in audited financial statements?
Distinguish between the Titanic and a sinking fund.
Why must financial disclosure include the cost, accumulated depreciation, and net value of fixed assets?
What requirements must be met to record an asset?
When can liabilities be recorded?
What is meant by double-entry accounting?
For each of the transactions below, record whether it would result in an increase or decrease in assets and/or liabilities. An organization:1. Purchases supplies with cash.2. Purchases supplies on account.3. Takes out a loan.4. Repays loan principal.5. Receives payment on a pledge.6. Makes a
Shanna Engel started up a new nonprofit organization in 2017 named Concern for Animal Shelter and Habitats (CASH). The organization places homeless animals in permanent homes. Transactions during the first month of operations were as follows:1. Borrowed $50,000 from a local bank. No interest is due
For each of the transactions below, record whether it would result in an increase or decrease in assets, liabilities, and/or net assets. An organization:1. Earns revenue.2. Receives a donor pledge.3. Purchases supplies with cash.4. Purchases supplies on account.5. Takes out a loan.6. Repays loan
The Science Road Show (SRS) is a not-for-profit organization that puts on traveling science demonstrations throughout the state. SRS operates on a September 1–August 31 fiscal year. The organization began FY 2018 with the following account balances: SRS recorded the following financial events
Please use the following choices to fill in the blanks in the next two questions:a. unrestricted b. temporarily restricted c. permanently restricted1. When Professor Chellman endows an annual lecture series at the Wagner School, he stipulates that only the interest income derived from his gift
The Abby Arboretum (AA) is a not-for-profit organization that has several programs, such as gardening, grade-school education, environmental efforts, and a reforestation program. It draws many volunteers for its efforts. Indicate which, if any, of the following activities should be recorded as
Indicate whether each of the following actions would result in a change in unrestricted, temporarily restricted, or permanently restricted net assets this year:a. A donor gives the organization a cash contribution to be used for expanding the organization’s food pantry program.b. The organization
Please use the following choices to fill in the blanks below:a. modified accrual b. accrual c. cash 1. Under the _______ method of accounting, expenses are recognized when assets are used up, while under the _______ method, expenditures are recognized when the asset is
Marloweville, with 20,000 residents, is deciding how to finance the construction of a new municipal stadium that will enhance both recreation and tourism in the area. The construction cost of the stadium is $10,000,000. By law, all proceeds from debt issuance are placed in Marloweville’s Capital
The South City Golf Course purchased a new golf cart for $18,000 in cash at the beginning of the fiscal year. South City accounts for the golf course using an enterprise fund. It plans on using straight-line depreciation for its capital assets. South City expects the cart to last 6 years and have
Are liquidity ratios appropriate for financial condition analysis?
What are some examples of debt burden measures?
The municipality of Lossburgh reported the following information about its pension fund in its CAFR, for the year ended June 30, 2015, prior to recent GASB changes: Calculate the funded ratio, the benefits coverage ratio, and the ratio of investment earnings to benefits for both years. Assume
How did Lossburgh’s pension fund compare to these benchmarks? What trends do you observe?
Accrual budgets plan for expenses for supplies when ________, while cash budgets plan for the expense when ________. (choose from below) 1. They are ordered2. They are delivered to the organization3. They are paid for4. They are consumed5. It depends of the type of expense.

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Financial Management for Public, Health and Not-for-Profit Organizations 5th edition Steven A. Finkler, Daniel L. Smith, Thad D. Calabrese, Robert M. Purtell - Solutions

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