Chapter 17 Accounting for Co-operative Societies

FEATURES OF A CO-OPERATIVE The owners of a business in this nature are called members. These members agreed collectively to pay sums of money for shares. All co-operatives use a combination of features from non profit organizations, Partnership Companies and Limited Liability Companies.

SOURCES OF CAPITAL The sources of capital for co-operatives are from the members who apart from purchasing shares may also purchase goods and services. To record the issue of shares, the entries in the General Journal will be: – Dr. Bank/Cash Cr. Share Capital a/c

Financial Statements At the end of every financial year, co- operatives are expected to prepare: – Receipts and Payments account – Cash Flow statement – Trading and Profit and Loss Account (Income and Expenditure account/Income statement) – Appropriation account – Balance sheet.

TRADING AND PROFIT AND LOSS ACCOUNT Information to prepare these statements will come from the Receipts and Payments a/c. Revenues and expenses will be used to prepare these statements which are dependent on the particular activities of the firm. Included in these statements is Honorarium which is the small amount co-operatives paid to committee members.

APPROPRIATION ACCOUNT Information for this statement comes from the Receipts and Payments a/c and Income and Expenditure a/c. The amounts to be transferred and retained as reserves, funds or schemes will be decided by the Board of Directors. The remainder of the surplus (after the transfers) is available for distribution as dividends.

APPROPRIATION ACCOUNT After the dividends are paid, the undistributed remainder will be carried forward to the next period as undistributed surplus.

BALANCE SHEET Information for the Balance Sheet will come from the Receipts and Payments a/c and the Appropriation a/c. The format of the Balance Sheet (Assets and Liabilities) will be the same as other organisations.