Which statement about net income in not-for-profit businesses is correct?

The statement that the entire amount of net income is reinvested in the business is accurate. In not-for-profit organizations, rather than distributing profits to shareholders or owners, any surplus revenue generated (often referred to as net income) is typically utilized to further the mission and objectives of the organization. This means it is reinvested into programs, services, and operational improvements that align with the not-for-profit’s goals.

This approach reflects the fundamental nature of not-for-profit entities, which are driven by their mission rather than profit maximization for shareholders, as seen in for-profit businesses. Not-for-profits focus on enhancing value through service rather than through financial returns to investors. It's also important to note that although financial terms like "net income" may be used, their implications differ from those in the for-profit sector, emphasizing the reinvestment into community and organizational growth rather than shareholder distribution.