PRC-3 · Chapter 1 · Question 55 of 61
An educational trust operates a school and generates an excess of Rs. 2 million in tuition fees over its operating costs this year. As a not-for-profit organization, what is the legally permissible use of these excess funds?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Reinvesting them completely to improve school facilities and student programs
Explanation
Not-for-profit organizations cannot distribute surplus funds to owners; they must retain and reinvest the surplus strictly to advance their social or educational mission.
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