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Difficulty: MediumCooperative Societies: Types, Principles, Features, and Operation

A multipurpose cooperative society in Enugu State generated a net trading surplus at the end of its financial year. In accordance with Rochdale principles, on what basis should the dividend be distributed to the members?

  1. According to the total value of business transactions each member conducted with the society during the yearAnswer
  2. B
    In proportion to the number of equity shares held by each member in the society
  3. C
    Equally among all financial members irrespective of their patronage or capital contributions
  4. D
    Based on the duration of membership and seniority within the cooperative society

Answer

The dividend should be distributed according to the total value of business transactions each member conducted with the society during the year.
The correct answer states that distribution is based on the total value of business transactions each member conducted with the society. Under Rochdale cooperative principles, net surplus is refunded to members as a patronage dividend proportional to their active trade or transactions with the cooperative.

Step-by-Step Solution

1
Identify the type of organization and the fundamental principle governing surplus distribution.
The organization is a cooperative society operating under Rochdale principles.
Cooperative societies prioritize service to members over return on capital.
2
Apply the Rochdale principle regarding dividend distribution.
Surplus is distributed as a dividend on patronage.
Members who utilize the cooperative's services more contribute more to its surplus and should be rewarded proportionately.

Key Concept

Dividend on Patronage (Rochdale Principles)
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Topics

Cooperative Societies: Types, Principles, Features, and Operation

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