It also invested in vehicles and equipment and expanded staff from 6 to 16 full-time and part-time staff. By Christmas 2015, Duncan was impressed enough with Chang’s work and PASS’s accomplishments that he agreed to forgive $40,000 of the $100,000 loan. Because the long-term obligation was to be forgiven, PASS would need to recognize the value of the forgiven loan as unrestricted revenue. Duncan expected to receive payment on the balance of the loan as agreed.

  • For taxpayers to assess this they’ll need to see those revenues, expenditures, assets, and liabilities presented separately from all other operations.
  • At the end of 2015 OP reported $181.3 million in assets in its employee retirement plans.
  • Treehouse invests in Boeing stock precisely because it expects the price of that stock to increase.
  • For several weeks, the country anxiously awaited word on what DOJ would do next.
  • Financial strategy can be dry but the authors do a great job of motivating the tools described and study of them by students.

The next figure shows the composition of special districts’ revenues. It shows each revenue source as a percentage of total revenues for each type of special district. For example, in 2012 public hospitals derived 77% of their revenues from charges and fees. In other words, a typical hospital earns revenue by collecting fees from patients (and patients’ health insurers including Medicare and Medicaid). Public hospitals levy property taxes (12%) and receive federal (4%) and state (7%) intergovernmental revenues.

Profit = px – (a + bx)

To illustrate, assume the full annual cost of HPM was $800,000, and that Cheng County must bill Duncombe County for Duncombe County’s share of those costs. These are just a few of the many barriers that prevent public organizations from acting more like Boeing, at least with respect to cost analysis. She has also asked you to prepare proforma financial statements including the Statement of Financial Position and a Statement of Activities (see Exhibit 1 and 2). She has asked you to prepare a monthly cash budget for FY 2017 (see Exhibit 3, 4 and 5).

The Basic Financial Statements Financial Strategy for Public Managers

Inter-period equity is the idea that if a government follows its budget, it is living within its means and it is less likely to pass costs onto future generations. Technically speaking, net assets are simply the difference between assets and liabilities. For private sector entities, this difference is known as owner’s equity. Learn more about how Pressbooks supports open publishing practices.

The Federal Government “Budget Process”

Also, each statement’s presentation style and terminology can vary depending on the type of organization that prepared it. Textbooks are reviewed by subject matter experts in addition to our quality assurance process. Reviewers are paid an honourarium to provide their honest feedback on the material. This article will teach you more about how to read an income statement. This article will teach you more about how to read a balance sheet.

Temporarily restricted net assets represent assets with time and/or purpose restrictions stipulated by a donor. Permanently restricted net asset represent assets with donor restrictions that do not expire.Note that these net asset restriction categories are for non-profit organizations. Governments use a separate classification scheme for net asset restrictions. Special districts are local units of government that are independent from counties and municipalities. They are called many different things, including public authorities, special-purpose districts, autonomous governments, special taxing districts, and public corporations, among others.

The Governmental Funds Statements

For a service sharing arrangement to work, the two Counties must decide how to share these costs. Surveys show that many local public health departments would like to offer more services related to hypertension outreach and management. Chronic health conditions like heart disease and diabetes are known to be related to high blood pressure, so better management of high blood pressure can affect public health in a substantial, positive way. But many citizens, especially those without health insurance, do not have access to regular blood pressure screening and other services needed to identify and manage hypertension. This case came about because of some disagreements over how to measure costs.

The Basic Financial Statements Financial Strategy for Public Managers

Most CVP today is done in spreadsheets to allow for maximum flexibility when exploring alternative cost scenarios, especially when analyzing services with step-fixed costs. That said, it’s still important to understand the basic concepts. Some economists argue that sunk costs ought to be irrelevant to future decisions. In other words, at the margin, all that matters is the future, measurable, variable costs. These costs are much harder to measure, but they are key components of decisions about cost sharing.

Supporters of the status quo say that funds, while cumbersome, are our best available means to ensure fiscal accountability. Investments are an important exception to the historical cost rule. Most investments The Basic Financial Statements Financial Strategy for Public Managers trade on an exchange like the New York Stock Exchange or the NASDAQ. The prices quoted on those exchanges are a good estimate of the price at which that organization could sell that asset.

The Basic Financial Statements Financial Strategy for Public Managers

On the asset side, we see many of the same assets we saw at Treehouse. Like a non-profit, current assets are assets it expects to collect within the fiscal year. OP has accounts payable, unearned revenue, accrued expenses, and other items we’d see at a non-profit or for-profit entity.But there are several important differences. A government records a deferred inflow of resources when it receives resources as part of a non-exchange transaction in advance. Imagine a property owner in OP paid their property taxes for 2016 in July of 2015.

Special districts do offer more local control, but the evidence suggests they often do the opposite. Voter turnout for special district elections is usually among the lowest for all elected offices. Academic research shows citizens rarely know that special districts even exist, and almost never know who they voted for in the last special district election. So there’s little evidence that special districts offer better democratic accountability. Another practical concern is that the proliferation of special districts has drastically increased the total amount of local government debt outstanding.