Skip to content

ACCA Applied Skills · Financial Reporting · Not-for-profit and public sector entities

Which of the following is the most significant difference between the primary objective of a not-for-profit entity and that of a profit-seeking entity?

A not-for-profit entity exists to provide services or benefits to its members or beneficiaries rather than to produce a financial return for owners. It still keeps accounting records, can have varied funding and holds non-current assets, so the other statements are wrong.

  1. AA not-for-profit entity is not required to keep accounting records
  2. BA not-for-profit entity aims to provide services or benefits to its members or beneficiaries rather than to generate a return for ownersCorrect
  3. CA not-for-profit entity must always be funded wholly by government
  4. DA not-for-profit entity cannot hold any non-current assets

Explanation

The main purpose of a not-for-profit entity is to deliver services or benefits to its beneficiaries, not to maximise returns for owners. The other options are untrue: such entities do keep records, may be funded from many sources, and hold assets.

Did you get it right without looking?

One question tells you little. A timed set on Not-for-profit and public sector entities shows your real accuracy, how long you take and where you lose marks.

Practise Not-for-profit and public sector entitiesFree diagnostic mock

More Not-for-profit and public sector entities questions