3.1.1 Distinction between profit and not-for-profit organizations:

Question 1

Profit Orientation:

Answer 1

Explanation: Profit organizations aim to generate income that exceeds their expenses, while not-for-profit organizations prioritize their mission over profit.

Example: A for-profit tech company seeks to maximize shareholder returns, while a not-for-profit charity focuses on its social cause.

Question 2

Revenue Sources:

Answer 2

Profit organizations primarily rely on sales and investments for revenue, while not-for-profit organizations may depend on donations and grants.

Example: Amazon generates revenue from selling products, while the Red Cross relies on donations during disasters.

Question 3

Distribution of Surplus:

Answer 3

Explanation: Profit organizations distribute surplus (profits) to shareholders or reinvest it, whereas not-for-profits reinvest surplus in their mission.

Example: A corporation pays dividends to shareholders, while a museum reinvests in its exhibits and educational programs.