Question

Distinguish between profit and not-for-profit organisations.

Distinguish between profit and non-profit making organisations.

Answer 1

Basis of difference	Non-profit organisation	Profit organisation
Meaning	They did not do their work for earning profit rather than their main objective is to do work to achieve a specific goal for the welfare of society or its members.	A profit organisation is that organisation that exists to make a profit for its owner(s).
Main objective	To serve society for a better future.	To earn more profit to run the business because profit is the fuel of every business.
Source of revenue	The main sources of revenue for the NPO are donations, grants, membership fees and entrance fees.	The main source of revenue for the profit organisation is the amount received from selling its products and services.
Financial statement	Financial statements included the following statements: 1. Receipts and payment A/c 2. Income and expenditure A/c 3. Balance sheet	Financial Statements included the following statements: 1. Trading A/c 2. Profit/Loss A/c or Income statement 3. Balance sheet 4. Cash flow statement
Managed by	This type of business is managed by its trustees, committees or any person authorised by the whole membership.	It includes mainly three types of business. So it is managed as per the type of business: 1. Sole proprietorship – Managed by its owner. 2. Partnerships – Managed by its partners. 3. Companies – Managed by their directors.
Funded from	It started with funding received from donations.	It started with an initial capital investment by its owner(s).