• 6 Marks

BMIS – Nov 2016 – L1 – Q1a – The business organisation and its stakeholders

Differentiate between profit and non-profit organizations in terms of purpose, fundraising, and surplus utilization.

Both profit and non-profit making organizations operate in the economic development of every country. However, they differ in their objectives and operations.

Show these differences with reference to the following: i) Purpose of existence (2 marks)
ii) Raising of funds (2 marks)
iii) Utilisation of surplus funds (2 marks)

i) Purpose of existence: For-profit organizations have a basic purpose of operating for profit, whilst not-for-profit organizations’ purpose of existence is to pursue a particular social cause. (2 marks)

ii) Raising of funds: For-profit organizations raise funds from their shareholders, whilst not-for-profit organizations raise funds from their members or donations from the general public. (2 marks)

iii) Utilization of surplus funds: For-profit organizations may share surplus funds in the form of dividends to their shareholders, whilst not-for-profit organizations will use the surplus funds to further achieve their purpose or mission. (2 marks)

Back to all questions

Pick a Form

Professional Tutor Application Form
Academic Tutor Application Form
Student Tutor Application Form