Ivan P. Biore
ACP 421 (514)
Appreciating Cooperatives
1. What are the unique accounts of a cooperative? Identify and explain.
Based on the set of financial statements I searched online. Accounts that are
unique in cooperative are deposit liabilities, patronage refund payable, due to
unions/federations and retirement fund payable. In addition, it includes deposit on share
capital subscription, reserve fund, cooperative education and training fund, community
development fund, statutory funds and net surplus. As I observed, funds are the major
accounts of cooperatives as they serve as their main source in operating their business
to meet their common economic, social or cultural needs. In addition, they used net
surplus instead of net income because they are concerned about the members’
contribution for their public welfare and benefit rather than operating business for some
income or profit.
2. How does a cooperative differ from a sole proprietorship? partnership?
corporation?
One main difference of cooperatives from sole proprietorship is that in the owner
of sole proprietorship he/she has a full liability on company’s debt. However, in
cooperatives it has limited liability, it means that cooperative’s members are not
personally liable for the det of the business. In partnership, a division or sharing among
partners from their profits and losses takes place. On the other hand, cooperative works
on the concept of cooperation among members who join for a common cause. Lastly, one
of the distinct factors of a corporation that differs from cooperative is that corporations are
owned by shareholders or stockholders while cooperatives are owned and controlled by
its members or the people who use the service of the cooperative.
3. What are the particular accounts in cooperative that poses a high risk of
misstatement?
Some of the cooperative accounts that, in my opinion, represent a high risk of
falsification are the cooperative education and training fund and the community
development fund. It is simple to manipulate, overestimate, or understate these money.
These funds are designated for initiatives or actions that will help the neighborhood in
which the cooperative is based. Given that they are measured using historical costs and
have not yet been used, there is a significant danger of misstatement if the right allocation
of where they were used up is not made.