Which of the Following Statements About a Not-For-Profit Firm's Ownership

question 7

Multiple Choice

Which of the following statements about a not-for-profit firm's ownership is most correct?

• A) the residual earnings (profits) of not-for-profit firms can be distributed to the firm's top managers.
• B) not-for-profit firms are exempt from federal taxes, but they must pay state and local taxes, including property taxes.
• C) upon liquidation of a not-for-profit firm, the proceeds from the sale of its assets are distributed, on a pro rata basis, to the firm's employees.
• D) none of the profits are used for private inurement.
• E) not-for-profit firms are governed by a board of trustees whose members are elected by the community at large.

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Definitions:

Production Possibilities Curve

A graphical representation showing the maximum quantity of goods that can be produced using limited resources to the fullest extent, at a given technology level.

Maximum Combinations

Maximum combinations represent the highest number of product or service bundles that can be produced or offered given a set of resources and technology.

Linear Equation

A mathematical expression that represents a straight line when plotted on a graph, typically in the form y = mx + b.

Vertical Intercept

The point at which a line meets the vertical axis of a graph.