Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What type of organization typically operates on a not-for-profit basis?

1. Public sector organization

2. Hollow organization

3. Private sector organization

4. Modular organization

The correct answer is: Public sector organization

A public sector organization typically operates on a not-for-profit basis because its primary focus is to serve the public interest rather than generate profits for shareholders. These organizations are funded by taxpayers and are responsible for providing essential services such as education, healthcare, public safety, and infrastructure. The goal is to enhance the well-being of the community and support societal needs, rather than pursuing profitability, which is often the case in private sector organizations. Private sector organizations, in contrast, are driven by the goal of generating profit and may distribute earnings to shareholders. Hollow and modular organizations refer to specific structural arrangements within the business world, but they do not inherently define a not-for-profit model; instead, they describe the way organizations might outsource work or operate flexibly. Therefore, public sector organizations are the most fitting answer in the context of not-for-profit operations.