Co-operative societies are established

The Government has been encouraging the establishment of co-operative societies in order to help the weaker section of the society. Various co-operative societies in various areas like consumer co-operative societies, producer co-operative societies, service co-operative societies, and so on. Co-operative societies are institutions dealing in all kinds of business transactions. It becomes necessary for them to maintain accounts in proper and systematic manner. Persons of limited means and weaker section of the community joined together to meet their common economic needs in the initial stages of organization of co-operative societies. The persons who controlled their administration and accounts were totally ignorant about the principles of double entry book-keeping. They, however, evolved an indigenous from of account keeping suiting their convenience and understanding. The dual aspect of any transaction is denoted by the symbols ‘Dr.’ and ’Cr.’ according to the double entry book-keeping. The words ‘Dr.’ and ‘Cr.’ create confusion for a layman and thus two alternative words ‘ Receipt’ and ‘Payment’ are used to convey the two fold aspect of a transaction. The Accounts of co-operative societies follow the principle of double entry book-keeping but with certain modifications in the procedures; these modifications are made for the convenience of those persons who are entrusted with responsibility of maintaining the accounts of co-operative societies.

Co-operative societies are established under the co-operative societies Act 1912. Some of the states have adopted this act without any change while some other states have introduced some changes in it. From the liability point of view, the co-operative societies may be of two types, namely limited liability societies and unlimited liability societies. The liability of the members of a limited society is limited. In the event of loss the members cannot be made liable to pay more than the nominal value of share held by them. No member other than registered society can own more than 20% of the share of the society or the value of the shares should not increase more than Rs. 1000. The liability of the members will be unlimited if the object of the society is to raise funds in order to lend money to its member or where the majority of the members are creditors of the society