Which of the following conditions is applicable to all not-for-profit organizations?
A)They must be classified as a church,educational,or charitable institution.
B)Their earnings should be used to benefit the shareholders.
C)Profit must be reinvested and used for the organization's exempt purpose.
D)Shareholder earnings are limited by the tax code.

Question

Quizplus · Accepted Answer

Not-for-profit organizations are exempt from paying taxes on their earnings as long as they are reinvested and used for the organization's exempt purpose, rather than being distributed to shareholders. This is a key characteristic of not-for-profit organizations. Choices A and D are not applicable to all not-for-profit organizations as some may not fall into those specific classifications or have shareholders. Choice B is incorrect as not-for-profit organizations do not have shareholders whose earnings need to be considered.

Which of the Following Conditions Is Applicable to All Not-For-Profit