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UNIVERSITY OF TEXAS AT EL PASOMPA PROGRAMPAD 5352 PUBLIC BUDGETING AND FINANCIAL MANAGEMENTSPRING 2019 FINALDUE: MAY 9TH ON BB (SAFE ASSIGN)Ljubinka Andonoska, PhDStudent’s Name: __Javier Aguilar_____________________________Instructions:1) Print your initials at the top of each page.2) Write clearly, show your work, and highlight your final answer. 3) Use spreadsheet (excel or other) whenever needed; however, you either copy-paste the whole calculation in your word document or you print it in spreadsheet and then attach it to your word document. Either way, I will need to see your calculation. When needed, you are expected to describe the procedure. 4) The exam is worth 20 points (20% from the final class grade). 5) This is an open book, open notes exam. You may use your books and notes, but you may not collaborate or share your answers with your classmates. 6) The final exam is due on BB Safe Assign. You need to copy paste your tables from excel and submit one word document (not a pdf). If you do not know how to do that, please contact tech support in the UTEP’s library, 3rd floor. Good luck!PART I) Multiple choice (5 points total)1) What is the fundamental equation of accounting for a balance sheet? (0.5 point)The fundamental accounting equation, represents the relationship between the assets, liabilities, and owner’s equity of a business. Accounting equation is the foundation for the double-entry bookkeeping system. For every transaction, debits equals to credtis. The accounting equation to be presented as under:2) A not-for-profit opera company purchased a new lighting rig for $275,000 exactly two years ago. The lighting rig is expected to have a useful life of 10 years and a salvage of $25,000. The net book value for the lighting rig that would be reported on the balance sheet today is (circle one): (0.5 points)a) $25,000b) $50,000c) $225,000 d) $250,0003) Which generally accepted accounting principle (GAAP) would require a not-for-profit organization to assign a dollar value to all the donated goods it received throughout the year? (0.5 points) 4) Assuming an organization operates at a profit during the fiscal year and has liabilities, its return on net assets ratio (change in net assets / total net assets) will always be greater than its return on assets ratio (change in net assets / total assets). (0.5 points)a) Trueb) False5) Fill in the blanks: If a nonprofit organization buys a $1,000,000 building, its net assets would Stay the same while the same transaction for a government fund would result in a(n) INCREASE in fund balances: (0.5 points) a) increase b) decrease c) stay the same d) can not tell from the information given6) What is performance budgeting? (0.5 points)Performance budget has been defined as a budget based on functions, activities and projects. In other it may be described as the budgeting system in which input costs are related to the performance or end result. It is a system of budgeting which provides for appraisal of performance as well as follow up measures. The performance budget is a budget based on functions, activities and project which focus attention on the accomplishment, the general and relative importance of the work to be done and the services to be rendered rather than upon the means of accomplishments such as personnel, service, supplies, equipment etc.7) What does “3/10 N/30” mean? Under what conditions should an organization take advantage of “3/10” (0.5 points)Pay within the discount period an recognize a saving 8) Why does an organization keep cash? (0.5 points)Some business require bulk cash for day to day operations especially for making payments to temporary work force and also for making regular cash purchases for raw materials. Cash holding is required on the basis of daily average requirements.But cash holding is mandatory in Banks to meet the payments for withdrawals and also to make payment of time liabilities for deposits on the basis of which the credibility of a financial institution is vested on. The average requirements are budgeted and cash holding is done on the basis of that.Companies do hold cash for :1- Making taxes payment.2- Payments of duties, charge, or any tax.3- Payment of Petty Cash or small nature of expenses.4- Emergency purchase like medicine or consumables in Healthcare5- To avoid dishonouring the cheque if the bank have less balance.But we need the insurance for safeguarding the cashThere are five basic purposes :1. Transaction motive2. Speculative motive3. Precautonary motive4. Financing motive5. Compensating motive9) What is a sinking fund in an organization? (0.5 points)is a target amount of money in a specified period of time is required, which periodic payments are made regularly over the period of time. 10) What are the various types of long-term debt? (0.5 points)Long-term debt is a means of financing that allows firms access to capital without diluting equity; capital & interest is paid off over time.Various type of long term debt is mention below:1. Bank Loan2. Bonds3. Term loan4. LeasingPART II Analytical problems (15 points total)1) (3 points) Assume that you are the nursing administrator for a medical group that expected a severe outbreak of flue in the spring. You planned to hire additional staff to treat patients and administer shots. Your special project budget was for 1,000 hours of part-time nurses’ services at $40 per hour, for a total cost of $40,000. It was expected that these nurses would treat 2,000 patients. After the flu season was over, it turned out that the total spent on part0time nurses was 50,000. The nurses worked 1,200 hours and 2,600 patients were treated. Calculate the variances. Was the overall result favorable or unfavorable? 2) (3 points) Using the problem from question 1, assume that the nursing administrator expected 400 patients for flu shots and 1,600 for flu treatment. The medical group typically charges $50 for a flu shot and $80 for treating a flu patient. Actually, the group had 1,200 patients who received flu shots and 1,400 who had flu and received treatment. On average, it was able to collect $55 per flu shot and $70 per flu patient. Compute the volume, mix, and price revenue variances. How did things turn out for the group ey turn out from profit perspective?considering just revenues? How did th 3) (2 points) Mill Bridge Hospital buys its supplies in bulk and has recently switched vendors. The first purchase Mill Bridge made was for 450 boxes of gauze at $4.25 a box. The purchase had payment terms of 1/15 N/30. Mill Bridge earns 2 percent on its idle cash. Should it take the discount or not? Justify your answer by showing calculations. 4) (3 points) Meals for homeless has many sources of income but they pay Meals very differently. Specifically, Meals has contracts with the city, county, and state to provide food services. In addition, Meals has contracted with a private foundation to augument its foods with more helpful options. The city owes Meals $400,000, half of which current, one quarter is more than 30 days but less than 61 days old, 15 percent is between 61 and 90 days old, and the remainder is more than 91 days old. The county owes Meals $900,000, only one third of which is current, another one third is more than 30 days but less than 61 days, and the remainder is more than 90 days old. The state owes Meals $1.5 million, 40 percent is current, 30 percent is between 30 days and less than 61 days old, 20 percent is between 61 and 90 days old, and the remainder is more than 90 days old. The foundation owes Meals $150,000, of which half is current and the other half is more than 30 days old but less than 61 days old. Prepare accounts receivable aging schedule for Meals by total dollars and by percent. 5) (4 points total) The Starving Artists Center (SAC) began operations on January 1st 2018, the first day of its fiscal year, with the assets, liability and net asset balances shown in the table following part B of this question. A. Record the nine transactions below. Be sure to identify the accounts impacted by each transaction and show that the transactions are balanced. 1) On January 4, SAC ordered $10,000 of art supplies 2) On January 12, 2018 SAC received the art supplies ordered at the beginning of the year. 50% was paid in cash.3) Employees at SAC earned a total of $100,000 during the 2018 fiscal year and SAC paid $120,000 to its workers4) During the 2018 fiscal year, SAC received $100,000 in cash donations and $50,000 in pledges. Historically, 10% of SAC’s pledges have been uncollectible5) On December 12, 2018 SAC made a payment of $50,000 related to its long term debt. $2,000 of this payment was interest.6) From January 1 to December 31, 2018 SAC used $18,000 of art supplies7) On December 31, 2018 SAC wrote off $2,500 of pledges that had not been collected within the past two years8) One January 30, 2018 SAC purchased a new reprographic machine for $5,000. During the fiscal year, SAC’s plant property and equipment depreciated $20,000.9) On December 31 2018, SAC purchased a two-year insurance policy and paid cash. That policy replaced SAC’s prior 2-year policy which was purchased for $2,000 and will expire on December 31, 2018.B. Record the beginning balances, all transactions and the ending balances using a worksheet presented in both the book and the class presentation. Using the data on the worksheet: a. Prepare a Balance Sheet for SAC as of December 31, 2018, the last day of SAC’s fiscal year, along with a comparison balance sheet for the prior fiscal year. Both need to be presented separately.