Multiple Choice
Which of the following is the primary factor that determines the type of accounting tool a business uses to track its costs?
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1. Introduction to Accounting
Types of Accounting
Multiple Choice
Which of the following financial institutions is a not-for-profit institution?
A
Insurance Company
B
Investment Bank
C
Credit Union
D
Commercial Bank
Verified step by step guidance1
Understand the concept of a not-for-profit institution: A not-for-profit institution operates to serve its members or community rather than to generate profit for shareholders. It reinvests earnings into its operations or services.
Review the characteristics of each financial institution listed: Insurance companies, investment banks, and commercial banks are typically for-profit entities that aim to generate returns for their shareholders.
Focus on the credit union: Credit unions are member-owned financial cooperatives that operate as not-for-profit institutions. Their primary goal is to provide financial services to their members at favorable terms rather than maximizing profits.
Compare the credit union to the other options: Unlike the other institutions listed, credit unions reinvest their earnings into member benefits, such as lower loan rates and higher savings yields.
Conclude that the correct answer is 'Credit Union' based on its not-for-profit nature and member-focused operations.
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