Question

Explain why it is important to identify whether the institution is public or Private. Clarify which of the two--public or private--follow the same reporting guidelines as nongovernmental not-for-profit organizations.

Answer 1

1) Determining the status of a company is the most important part of conducting company research. Public and private companies differ considerably in the availability of information about their operations, therefore you should have a basic understanding of their differences.

A public company (sometimes called a publicly held company) is usually a corporation that issues shares of stock (a stock corporation). In a public company, the shares are made available to the public. The shares are traded on the open market through a stock exchange.

A private company is a stock corporation whose shares of stock are not publicly traded on the open market but are held internally by a few individuals. Many private companies are closely held, meaning that only a few individuals hold the shares. But    some very large corporations have remained private.

2) Public company follow the same reporting guidelines as non-governmental non-profit organizations

Government and non-profit organizations aren't interested in making money, so they use an accounting system called fund accounting. Fund accounting essentially groups financial data together into funds or accounts that share a similar purpose.