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Is financial management important for public service organizations? If so, why?
What are the major sources of financing for the federal government, state and local governments, the health sector, and the not-for-profit sector?
How are budgets useful for motivation?
What are some negative consequences of unrealistic budget expectations?
Westchester City is constructing a new city hall. The building will cost $40 million and is estimated to have a useful life of 40 years. Based on the experience of similar cities and the best estimates of the city’s engineers, Westchester’s planners expect that at the end of 40 years the building will have to be torn down and rebuilt, so it is not expected to have any value at the end of 40 years. It will cost $6 million to acquire equipment for the new center. Equipment is assumed to last for 10 years. The city estimates that the equipment can be sold for 20 percent of its cost at the end of its useful life. If the city undertakes this project, what will the building and equipment expense be in the first year after the center is opened?
Prisons Counselors (PC) delivers counseling services to prison inmates for the state on a fee-for-service basis. It is preparing its cash budget for the month of March. Its operating budget reflects accrued fee-for-service revenues of $12,500, $13,000, and $14,000, respectively, for the months of January, February, and March. PC bills the state electronically at the end of each month for the services that it delivers to its fee-for-service clients. PC collects 60 percent of its fee-for-service billings in the month following the delivery of service, with the remainder being collected in the second month after the delivery of services. What are PC’s total cash receipts from the state for the month of March?