Question

TP2.

LO 7.1It is proper budgeting procedure to begin with estimated revenues, but why might some nonprofit entities begin planning their expenditures instead of their revenues?

Answer 1

Answer and explanation:

As their name describes, nonprofit entities are organizations whose main plan is not to have revenues out of their operations. They usually provide social services to different sectors of the population and can handle their operations mainly thanks to charity and donations. While making their budgets, these organizations cannot estimate their revenues since they cannot take donations for granted. Instead, they estimate their expenses since they will be incurred for sure.