Free Essay

Financial Expenditures

In: Social Issues

Submitted By geo4395
Words 635
Pages 3
The four elements of financial management are planning, controlling, organizing and directing, then decision making. Planning allows the financial manager to identify the steps needed to become successful towards accomplishing an organization’s goals. The manager must identify objectives and steps to accomplish the goals. The financial manager then controls each department of the organization. One way to oversee a departments’ progress is by comparing past and current departmental reports. Organizing and directing go hand in hand, but before directing the financial manager must organize and research an organization’s resources. The purpose of evaluating resources, determines how effectively objectives are accomplished.
Directing ensures the effective use of resources and providing supervision. Decision making allows the manager to make intelligent choices about accomplishing the goals of an organization. The generally accepted accounting principles or G.A.A.P. are accepted ways of reporting and recording organizations financial information .They are the rules used to arrange and regulate financial account reporting. G.A.A.P. includes recognition of revenue, balance sheets, and outstanding share amounts. Organizations are required to follow the principles when reporting their financial statements. Professional accountants must abide by ethical standards that standarize the way they conduct business.The Financial Accounting Standards Board, professional accounting and finance organizations determine the ethical standards. Ethical decision making is important when financial executives address a problem or uncertainty relating to competing standards, such as personal, organizational, professional and community values. Health care organizations face ethical problems including patient access and affordability. Pressures to reduce costs, combining health care facilities, and other financial restraints contribute to the growing concern in healthcare organizations. The state of Massachusetts requires the hospitals to file an Annual Financial Report within 100 days of the end of the fiscal year. The report contains the hospital’s 12 month financial accounting. All audit adjustments must be reported, regardless of self initiation or independent audits. Every hospital also includes information on changes in services, and utilization figures for the fourth quarter of the fiscal year, including monthly figures on beds, hospital stays and patient discharges. The utilization figures only reflect activity throughout the fourth quarter of the fiscal year. After submission, the Annual Financial Reports will be under review for a period of 20 days. After the review, period the reports are electronically accessible to the public. During the review, the state shares information with the Attorney General's Office, the Department of Public Health, and other related organizations and agencies, provided that any such entity with which the information is shared shall consent to treat information under the same privacy basis as does the state pursuant to regulations. The Sun Healthcare Group, Inc adopted the General Financial Ethical Standard. The purpose of the Financial Code of Ethics deters improper financial reporting and promotes integrity and ethical conduct. Sun, Inc. discloses complete, fair, efficient, and timely documents to the Security of Exchange or “SEC”. The organization must comply with governmental laws and regulations. The code applies to: the chief executive officer, chief financial officer, chief accounting officer, controller, or any other person performing financial duties. Any person violating the code including the chief executive officer faces disciplinary action including termination. The state of Massachusetts and Sun Healthcare Group, Inc are significant examples when describing the generally accepted accounting principles and general financial ethical standards. The state requires all hospitals to report their Annual Financial Reports. The purpose of reporting accurate information allows hospitals to receive governmental aid. A hospital’s revenue also determines the type of technological advancements that are presented to them. The general financial ethical standards are important when financial officers and personnel prepare reports regarding their organization’s financial standing. Falsifying information is unethical and may result in a healthcare facility loosing valuable shareholders and investors due to unethical conduct, which is detrimental to any organization.

Similar Documents

Premium Essay

The Expenditure Cycle

...I am going to describe the testing for control over the expenditure cycle. The expenditure cycle starts with the purchase requisition. The department in need of the service or assets sends a properly approved, serially numbered requisition to the purchasing department. The risk associated with the purchase requisition is that anyone could potentially make a purchase requisition order for any kind of amount. Therefore, to mitigate a risk associated with the purchase requisition, it is very important to have the right personnel to approve the purchase order. When I tested the expenditure cycle, I randomly chose the purchase requisition and I followed every step associated with that cycle and in In addition, I documented every step of my testing by describing every significant detail related to my testing. Also, I performed walkthrough by talking to the right personnel and asking them questions associated with my testing. That help me not only to better understand the entity’s business cycle but made my testing more reliable since I could determine appropriate segregation of duties among the personnel. The purchasing department should place the order after giving proper consideration to the time and quantity to order. The purchasing department should also obtain competitive bids from various suppliers to make sure the best price is obtained. The purchase order is issued only after proper approval. For the internal control purposes, it is best that prenumbered purchase......

Words: 318 - Pages: 2

Premium Essay

Capital Expenditure

...DEFINITION OF EXPENDITURE FOR CAPITAL PURPOSES Previous Definition in Financial Procedure Rules The previous definition of capital expenditure was set out in Part IV of the Local Government and Housing Act 1989. All capital expenditure and financing must be in accordance with the provisions of the LGHA 1989 and the Local Authorities (Capital Finance) Regulations 1997. No leasing or credit arrangement as defined by the LA(CF)R 1997 shall be entered into without the approval of the Director of Finance. Any service using an asset will be charged with a cost of capital employed which represents interest foregone in owning the asset and depreciation, representing the proportion of the asset’s useful life consumed in the year in question. Current Position The LGHA has now effectively been replaced by the Local Government Act 2003 which defines capital expenditure as ‘expenditure that falls to be capitalised under proper practices’. It then goes on to define proper practices as meaning the CIPFA Recommended Practice (SORP) and any specific legislation. Specific legislation relating to capital expenditure tends to be defined in various Capital Finance Regulations. The SORP definition of capital expenditure is therefore supported by statute. However, it does not have a single definition of capital expenditure, but includes references to capitalising expenditure in various parts of the SORP. In the Fixed Assets section of the SORP expenditure that should be...

Words: 388 - Pages: 2

Premium Essay


...Under United States income tax law, to make a deduction in the current taxable year, a taxpayer must be able to show that a particular cost is a business expense[1] (but not an expense related to personal activities)[2] and not a capital expenditure.[3] Capital expenditures either create cost basis or add to a preexisting cost basis and cannot be deducted in the year the taxpayer pays or incurs the expenditure.[4] In terms of its accounting treatment, an expense is recorded immediately and impacts directly the income statement of the company, reducing its net profit. In contrast, a capital expenditure is capitalized, recorded as an asset and depreciated over time. Contents [hide] 1 Four ways costs can be capital expenditures 2 Illustrative Example 3 See also 4 References 5 External links Four ways costs can be capital expenditures[edit] The Internal Revenue Code, Treasury Regulations (including new regulations proposed in 2006), and case law set forth a series of guidelines that help to distinguish expenses from capital expenditures, although in reality distinguishing between these two types of costs can be extremely difficult. In general, four types of costs related to tangible property must be capitalized:[5] 1. Costs that produce a benefit that will last substantially beyond the end of the taxable year.[6] 2. New assets that have a useful life substantially beyond one year.[3] For example, in Commissioner v. Idaho Power Co.,[7] the taxpayer used its own......

Words: 648 - Pages: 3

Premium Essay

Capital Expenditures About Ted

...Surgery Unit Director who is getting ready to prepare a capital expenditure funding program for the coming year. His unit is too small and is running at over 90% capacity, so Ted wants more room. On the other hand, a cardiology surgeon at the hospital wants to create a new cardiac surgery program that would require extensive funding for new state-of-the-art equipment. Therefore, the surgeon has been campaigning with the hospital board members (Baker & Baker, 2011). Furthermore, Ted will need valuable information and will need to have a great strategy to prepare the capital expenditure funding program. Baker & Baker (2011) explains, “Capital expenditures involve the acquisition of assets that are long lasting, such as equipment, buildings, and land. Therefore, capital expenditure budgets are usually intended to plan, monitor, and control long-term financial issues” (p. 177, para 1). While Ted is preparing a capital expenditure budget proposal, there are four requests he should ask for upon creating the proposal. First and foremost, Ted should compose a timeline to show when his unit will open along with justification of the need for the proposal based on firm estimates of future needs (Department of Premier and Cabinet, December 2010, p. 9). A timeline will be able to let the others see his plan more clearly. In addition, Ted should also ask for the hospital’s guidelines and criteria for preparing a capital expenditure funding program. Baker & Baker (2011) states, “Some......

Words: 860 - Pages: 4

Premium Essay

Comparing Capital Expenditures

...Comparing Capital Expenditures In certain industries there are clear leaders. For example, Wal-Mart is a clear leader in the retail industry and Google is a clear leader in search engines. But with smaller companies find ways to thrive in those giant’s shadows. Competition in the coffee industry is hard to distinguish at times, but Starbucks is a brand name that stands out on its own. Coffee competitors have done a good job of differentiating themselves by using environments and product mix. Coffee is the second largest U.S. import, and specialty coffee is forecasted to be an $11 billion dollar a year industry. In order to strive in this industry, companies must have the appropriate buildings, properties and equipment. Capital Expenditures are the cash that is used to buy, revamp or upgrade these physical assets. Capital expenditures are forecasted using CapEx % of gross profits and are allocated proportionally to each division based on the gross margin. This paper will compare the capital expenditures of Dunkin Brands and the Starbucks Corporation (Fig.1). Direct Competitor Comparison SBUX DNKN Market Cap: 49.50B 4.42B Employees: 160,000 1,104 Qtrly Rev Growth (yoy): 0.11 0.06 Revenue (ttm): 14.02B 667.67M Gross Margin (ttm): 0.57 0.79 EBITDA (ttm): 2.59B 313.12M Operating Margin (ttm): 0.14 0.39 Net Income (ttm): 1.51B 106.11M EPS (ttm): 1.97 0.94 P/E (ttm): 33.59 44.29 PEG (5 yr expected): 1.61 1.72 P/S......

Words: 1089 - Pages: 5

Free Essay

Expenditure allocate the expenditure of the country. Budget can be defined as an estimation of income and expenditure for a set period of time. Furthermore, budget is a microeconomic concept that shows the tradeoff made when one good is exchanged for another. . According to Ekstein (1973), budget can been define as detail statement of income and expenditure that have been made or expected to be made. There are several function of a budget which is as a policy tool and instrument. Means that, budget is a tangible of a policy decision whereby budget is a means of establishing policy that been accomplished through the budget’s allocation of government resource. Besides that other function of budget is as a management tool whereby almost all government activities are funded through the budget and since the budget is a continuous process it is an effective tool for the public official because it provides an effective management device at every stage of government activity. Means that, any of the activity planned by government will be reflected based from the budget. As example, in Malaysian budget the governments have their annual plan that been proposed projected revenue and propose the expenditure. It consists of revenue and expenditure for 1 year as a short term plan. There is two type of budget which is operating budget and development budget. Besides that, in budget there are two component of budget which is public expenditure and public revenue. Public Expenditure refers to the......

Words: 2240 - Pages: 9

Premium Essay

Expenditure and Revenue

...Expenditures and Revenues Summary: Palm Beach Sheriff’s Office Bianca Gerena AJS 522 Paula May May 26, 2014 Expenditures and Revenues Summary: Palm Beach Sheriff’s Office The Palm Beach Sheriff’s Office, a statutory government agency, is responsible for providing services to three mandated programs in Palm Beach County, Florida (, 2013). Those programs are Law Enforcement, Corrections Services throughout Palm Beach County’s jails, and finally Bailiff and Court staff. Palm Beach Sheriff’s office is required to respond to law enforcement calls throughout the county and all unincorporated areas of Palm Beach County. Palm Beach Sheriff’s office is also responsible for providing services to certain municipalities throughout Palm Beach County, if a contract exists between the municipality and the Sheriff’s office. The municipality must come to a fee agreement with the Palm Beach Sheriff’s office before a contract is established. The following will elaborate on the Palm Beach Sheriff’s Office revenue and expenditures and the impact of the expenditures on the revenue source. The following will also elaborate on who the key players are in terms of making budget decisions and whether or not there is any influence of political and public policies on the Palm Beach Sheriff’s Office. Finally, recommended organizational financial analysis alternatives for the Palm Beach Sheriff’s Office will be researched. The Impact of the Expenditures on the Revenue Source Palm Beach......

Words: 1743 - Pages: 7

Premium Essay

Qualified Rehabilitation Expenditures

...Rehabilitation Expenditures Date: June 7, 2014 Executive Summary: Case three was centered around two key debates falling under IRC §47. The first was whether or not moving a building was basis enough for disallowing rehabilitation expenditures credit and the second was whether the expenses incurred in moving the building qualify as qualified rehabilitation expenditures. The taxpayer’s defense in this case was built largely on the stance that statutory language was misaligned with original Congressional intent and that the IRS was interpreting the original legislation too narrowly. I agreed with the Taxpayer’s view in this case thanks in large part to the relevant Nalle case decision she cited and the precedential value it had coming from the U.S. Court of Appeals. The taxpayer also presented numerous similar cases of instances in which regulations were misaligned with original congressional intent. Although I side with the taxpayer in the form of the $3,000 rehabilitation expenditures credit, I agree with the IRS’s stance that the moving expenses are not qualified rehabilitation expenditures. I agree with the IRS because of their ability to provide a relevant Supreme Court decision that showed the moving expenses should be capitalized as part of the acquisition cost- basis of the building and thus not allowed as rehabilitation expenditures since acquisition costs are disallowed from qualified rehabilitation expenditures. Facts: ......

Words: 1697 - Pages: 7

Premium Essay

Revenue Expenditures

...Revenue Expenditures & Capital Expenditures Tracey DeSautel November 1, 2014 University of Phoenix XACC/291 In the world of accounting, there are numerous types of expenses that come along with running a business on a day to day basis as well as overall. There are things that break down and add value to the companies assets as well as things that are expensed to run the business on a daily basis. These can break down to two important items and those are Revenue expenditures and Capital Expenditures. Revenue expenditures is the amount that is expensed immediately. Thereby being matched with revenues of the current accounting period. Examples include things such as routine repairs because they are charged to a direct account such as “ repairs and maintenances expenses> these do not extend the life or improve the assets for the company. Capital expenditures are amounts spent to acquire or improve a long term asset. These can be things such as buildings or even equipment. These are usually recorded in accounts classified as “ property, plants and equipment”. These are charged to depreciation expense over the assets lifespan. It breaks down to capital expenditures are for items such as machinery and buildings where as revenue expenditures are for things that create revenue such as advertising and labor. A further look into capital expenditures and examples are that, that do not occur in daily transactions for the company and include such purchases that may include the...

Words: 354 - Pages: 2

Premium Essay

Revenue and Capital Expenditures

...Revenue and capital expenditure are aspects of business management that seem very similar at first. Both revenue and capital expenditure are purely focused on the process of spending money to help a business survive and grow. The key difference between the two is the intention of the expenses and the direction of the money flow. Revenue is for short-term costs that are not used afterwards to make the company grow, such as repairs which are most common. Capital expenditure is for assets that are considered or categorized long-term, such as new vehicles or software, which will be used to make the company stronger. Revenue expenditure is money being spent immediately and exclusively for short-term purposes. These are expenses associated with profit-producing assets, such as repair, that may or may not increase the life of the given asset. Revenue expenditure is more often associated with day-to-day costs the company accrues through its life cycle. Capital expenditure is money is being spent on assets that will increase the company’s ability to pull in profit or operate at a higher performance level. New software technology, vehicles, machinery and tools that will be used for at least 12 months are considered capital expenditure. Capital expenditure, unlike revenue, is looked at more as an investment than a cost, because it is being used to strengthen the company so it can do better business. When purchasing a capital asset, a business either will spread the cost out over the......

Words: 456 - Pages: 2

Premium Essay

Capital and Revenue Expenditures

...Capital and Revenue Expenditures 1 Capital and Revenue Expenditures Clarissa Jude April 24, 2015 University of Phoenix Capital and Revenue Expenditures 2 “A capital expenditure is an amount spent to acquire or improve a long-term asset such as equipment or buildings. Usually the cost is recorded in an account classified as Property, Plant and Equipment. The cost (except for the cost of land) will then be charged to depreciation expense over the useful life of the asset. A revenue expenditure is an amount that is expensed immediately—thereby being matched with revenues of the current accounting period. Routine repairs are revenue expenditures because they are charged directly to an account such as Repairs and Maintenance Expense. Even significant repairs that do not extend the life of the asset or do not improve the asset (the repairs merely return the asset back to its previous condition) are revenue expenditures.” (Wizell, John, Accounting Made Easy. 2010). This in summary means that every cost to purchase, keep up and maintain said purchase will be reported in the financial documents. The difference between capital and revenue expenditures are: Capital Expenditures | Revenue Expenditures | 1 | Its effect is long term i.e., it is not exhausted within the current account year. Its benefit is enjoyed in future year or years also. In a word, its effect is reduces gradually. | 1 | Its effect is temporary, i.e., it is......

Words: 504 - Pages: 3

Premium Essay

Government Expenditure and Revenue

...Government Expenditure and Revenue by Ooi Soon Beng After studying this chapter, you should be able to understand:  Public Budget  Budget Deficits and Surplus  Expansionary and Contractionary Fiscal Policy  Discretionary and Automatic Fiscal Policy  National Debts and Its Issues and Misconceptions  Problems with Fiscal Policy : Macroeconomics According to Keynes, government has to intervene to stabilize the economy. Stabilization can be achieved in part by manipulating the Public Budget to increase output and employment or to reduce inflation. The Budget outlines the government’s taxation and expenditure plans for the coming fiscal year. The Ministry of Finance are responsible for the preparation of the budget. Sources of Revenues:  Direct taxes on individuals and companies  Indirect taxes on goods and services (gasoline, alcohol, tobacco, etc)  Non-tax revenue (stamp duty, licenses, permits, etc) Malaysia: Sources of Revenue (in RM) 1990 2013 2014 Direct Taxes 35.2% 56.5% 59.1% Indirect Taxes 36.7% 16.6% 17.2% Non-Tax Revenue 28.0% 26.9% 23.7% Total Revenue 29,521m 207,913m 224,094m Source: Ministry of Finance Categories of Expenses:  Operating Expenditure (emolument, pensions, debt servicing, grant to states, subsidies, supplies, scholarships, etc)  Development Expenditure (security, social services, economic services, expenditure on......

Words: 2314 - Pages: 10

Premium Essay

Influencing Factors of Healthcare Expenditure

...Care Expenditure: Opportunities to Improve Canada’s Statistics [Authors Name] [Institutional Affiliation(s)] Author Note [Include any grant/funding information and a complete correspondence address.] Table of Contents Introduction………………………………………………………………………………2 Comparing Health System Performance…………………………………………………4 Sweden’s Healthcare Policy Framework………………………………………………...8 Canada’s Opportunities for Improvement………………………………………………..9 Conclusion……………………………………………………………………………….11 References……………………………………………………………………………….13 Influencing Factors of Health Care Expenditure: Opportunities to Improve Canada’s Statistics Globally, the number of variations that contribute to the government’s financial contribution to the health care system is great and ever changing. The amount of money spent on health expenditures varies as well, and is specific to each country. In countries with a high income, such as the United States and France, the per capita health expenditure averages over 3,000 USD, while in countries that are considered resource poor, such as Israel and Mexico, the average per capita amount is only 30 USD. (Ke, Saksena, & Holly, 2011). Wide variations in health expenditure are also specific to each country’s economic development. Less resourceful countries have been noted to only spend less than 3% of GDP on health, while other, more economically developed countries spend more than 12% of GDP on health. (Ke et al.,2011). The growth of health expenditures in......

Words: 2715 - Pages: 11

Premium Essay

Capitalised Expenditure & Long Lived Assets

...What does it mean when we say expenditure has been capitalised? When expenditure is capitalised, the expenditure transaction has resulted in control over a noncurrent tangible asset and that instead of the transaction being recorded in full within the corresponding purchase period’s Income Statement, it will be recognised annually within Balance Sheet as a depreciated expense for the operating life of the asset. (Marshall et al 2010, Averkamp n.d.) To be capitalised, the purchased asset must meet certain conditions: it will generate value for the business; is non-current as it will remain in the business for longer than 12 months; has a value that is significantly large to be of material interest (Marshall et al 2010). Most typically, expenditure will be capitalised for tangible assets such as land; buildings and equipment. The capitalisation process occurs in accordance with the matching principle; depreciation costs are allocated within the periods of use and business benefit from the asset. What does it mean to state that balance sheet values may not represent the current market values of long-lived assets? Long-lived assets, specifically non-current tangible assets are commonly capitalised and are recorded as depreciated expense, as described above. (e.g. If a business purchases a truck costing $100,000 and it is expected to be used for 5 years, the business might have depreciation expense of $20,000 in each of the five years (Averkamp n.d.).) Depreciation......

Words: 508 - Pages: 3

Premium Essay

Comparing Capital Expenditure for Nbd and Invesco

...Comparing Capital Expenditure for NBG and INVESCO Name: Course: Number: As defined by Hitchner, & Mard, (2003), capital expenditure is a cost that is incurred today for future benefits realization. Today’s capital expenditures create a difference in the company’s future status depending on the company’s strategies and resolutions. Capital expenditures are extensive and in most case, they will hold most of the company’s money. At one point in time, companies will invest in plant machinery, buildings, prime property, or any other form of fixed assets. Despite having the stage at which any company will have to incur capital expenditure, these capital expenses will vary depending on the industry the company is operating in, its operations, and the size of the company. Despite being closely related to the capital assets, capital expenses also relate to the maintenance cost of the already acquired assets (Hitchner, & Mard, 2003). The paper will analyze the capital expenditures of INVESCO and National Bank of Greece (NBG) companies by providing the differences and similarities of their capital expenditures. The analysis of the capital expenditure for the two companies will be between 2011 and 2013 financial years. The National Bank of Greece (NBG) The NBG is a global financial organization with well-established branches in various countries including the United States of America. NBG offers financial products and services to their clients ranging from those of......

Words: 1056 - Pages: 5