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from the financial perspective, briefly describe the concept of a business
from the financial perspective, briefly describe the concept of a business.
What is the difference between a business and a pure charity?
Expert Solution
Description and Characteristics
| Items | Business | Charity |
| Description | Business is an organization that is engaged in commercial, professional service and industrial. | Charity is an organization engaged in non-profit charitable missions or social causes to improve communities or individuals. |
| Characteristics: type of organization | For-profit or non-profit organization | For a non-profit organization |
| Characteristics: Purpose | To cater to the demand in the market | To cater to the needs of the community |
| Characteristics: Funding | Raising Capital, Investors, Loans and Sales | Donations, pledges, and government subsidies |
Business is an encompassing term. While Charity is a kind of business. This means that charity focuses on the needs of people and operates to help social causes or a specific charitable mission. Charitable organizations operate to fulfill their mission using the least possible cost. On the other hand, the business objective is to use the least possible cost and maximize profit.
Charities have a different set of accounting terms and process than those of a business engaged in earning profits.
A business can engage in charitable missions but the main purpose could be different. While a charity can operate as a business solely to gather funds for the charitable missions. The main difference is in the purpose of each.
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