Principles of Accounts
Accounting for Co-operative Societies
Co-operatives are formed primarily to give services to its members rather than making profits.
All members have a common economic interest.
Features of a Co-operative
1. Open Membership - Any member of society may become a member of a co-operative.
2. Liability of member is limited.
3. Resources are pooled together based on individual capacity.
4. Patronage Refund – the profits from cooperatives society belong to the members and
should not be distributed in a way that any member gains at the expense of another.
5. All members are shareholders/owners.
6. Profits are shared.
7. Equality in voting status/Democracy – members have equal voting rights regardless of
their capital.
8. Membership - the minimum number of individuals required to form a co-operative
society is ten and the maximum number is unlimited.
9. Education and training – Co-operatives provide education and training for their members,
elected representatives, managers and employees so they can contribute to the
development of the co-operative.
10. A separate legal entity. Members, directors, managers and employees are not liable for
any debts incurred unless they are the result of recklessness, negligence or fraud.
Advantages
1. Generally inexpensive to register.
2. All members must be active in the co-operative.
3. Members have an equal vote at general meetings regardless of their level of investment
or involvement.
4. Other than directors, members can be aged under 18 years. These members cannot stand
for office and don’t have voting rights.
Disadvantages
1. Co-operatives are formed to provide a service to members rather than a return on
investment so it may be difficult to attract potential members seeking a financial return.
2. There is usually limited distribution of profits to members.
3. Members providing greater involvement or investment than others will still only get
one vote.
Accounting for Co-operative Societies
Co-operatives are formed primarily to give services to its members rather than making profits.
All members have a common economic interest.
Features of a Co-operative
1. Open Membership - Any member of society may become a member of a co-operative.
2. Liability of member is limited.
3. Resources are pooled together based on individual capacity.
4. Patronage Refund – the profits from cooperatives society belong to the members and
should not be distributed in a way that any member gains at the expense of another.
5. All members are shareholders/owners.
6. Profits are shared.
7. Equality in voting status/Democracy – members have equal voting rights regardless of
their capital.
8. Membership - the minimum number of individuals required to form a co-operative
society is ten and the maximum number is unlimited.
9. Education and training – Co-operatives provide education and training for their members,
elected representatives, managers and employees so they can contribute to the
development of the co-operative.
10. A separate legal entity. Members, directors, managers and employees are not liable for
any debts incurred unless they are the result of recklessness, negligence or fraud.
Advantages
1. Generally inexpensive to register.
2. All members must be active in the co-operative.
3. Members have an equal vote at general meetings regardless of their level of investment
or involvement.
4. Other than directors, members can be aged under 18 years. These members cannot stand
for office and don’t have voting rights.
Disadvantages
1. Co-operatives are formed to provide a service to members rather than a return on
investment so it may be difficult to attract potential members seeking a financial return.
2. There is usually limited distribution of profits to members.
3. Members providing greater involvement or investment than others will still only get
one vote.
