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, cooperatives 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.