Finance and Accounting

Question 1

Financing sources for private sector enterprises

Answer 1

• personal funds
• angel investors
• banks (loans)
• venture capital
• stock exchange

Question 2

Acts governing investment in co-ops in Manitoba

Answer 2

• co-op act

- securities act

Question 3

the Co-op Act

Answer 3

permits selling of shares or investment by way of a loan in a co-operative to members
- limited exception to sell shares to non members

Question 4

The securities act

Answer 4

rules and safeguards for equity investment by requiring issuers to file offering statement/prospectus

Question 5

Financing principles

Answer 5

• members must assume the responsibility of financing the co-operative
• financial plans must be consistent with co-op principles
• members in co-ops contribute to capital

Question 6

Are most of the funds in a co-op raised from membership shares?

Answer 6

yes

Question 7

Equity in a co-op

Answer 7

in addition to membership shares, equity in co-ops can be raised with:

• Member loans (since members are owners loans can be considered as equity in some circumstances
• Preferred shares (non voting shares, have set dividend rate)

Question 8

CED

Answer 8

Community enterprise development tax credit

Question 9

What is the CED

Answer 9

a program that encourages Manitobans to invest in enterprises in their communities by providing a tax incentive, while providing community-based enterprises with access to equity capital

Question 10

Supportive investment funds (4)

Answer 10

• co-operative business capital fund
• social enterprise fund
• a green investment fund
• a local community fund

Question 11

Co-op debt:

Answer 11

• loans (short and long term)
• bonds
• not that different from private sector enterprises except for personal guarantees

Question 12

Can co-ops borrow funds at better rates than individuals?

Answer 12

yes

Question 13

Equity distribution to co-op members (2 ways)

Answer 13

1) portion of net profits retained by co-op (for expansion or reserve fund)
2) remainder of net profits are distributed to members as allocated equity

Question 14

Allocated equity also known as:

Answer 14

patronage dividends

Question 15

Profits from non-member business known as:

Answer 15

unallocated equity

Question 16

Who decides the amount of the patronage dividends

Answer 16

the Board members

Question 17

Worker co-op patronage dividends based on:

Answer 17

hours worked or annual pay

Question 18

credit union patronage dividends based on:

Answer 18

amount of interest paid or earned

Question 19

producer/marketing co-op dividends paid based on:

Answer 19

$ or volume

Question 20

Housing co-op dividends paid based on:

Answer 20

no patronage dividends

Question 21

Which type of co-op is it harder to divide and allocate patronage dividends?

Answer 21

multi-stakeholder co-ops

Question 22

Why are multi-stakeholders hard to divide patronage dividends?

Answer 22

Because the workers, consumers, and producers all have their own interests

Question 23

Profit distribution in Mondragon Co-ops

Answer 23

education fund- 10%
reserve fund - 45%
workers/members - 45%

Question 24

GAAP

Answer 24

Generally Accepted Accounting Principles focus on publicly listed investor owned companies
- specific accounting standards for non-profits, charities, and the public sector

Question 25

Is there a document that deals directly with accounting for co-ops?

Answer 25

No

Question 26

SORP

Answer 26

Statement of Recommended Practice: a form of sector specific accounting and reporting guidance document

Question 27

Financial similarities between co-ops and private sector enterprises (know 3)

Answer 27

• each have common ownership shares
• each can issue preferred shares
• each can issue bonds
• each can take on debt
• financial statements very similar
• reporting responsibilities are also similar

Question 28

Financial differences (know 3)

Answer 28

• common share voting rights
• common shares remain at par value
• patronage dividends to members
• deferred patronage dividends and unallocated equity
• what happens upon dissolution
• differences in accounting techniques

Question 29

ACL

Answer 29

Arctic Co-operatives Limited

Question 30

Co-op businesses in the arctic

Answer 30

• cable TV services
• petroleum delivery
• restaurants
• convenience stores
• post offices
• construction

Question 31

Co-op system in Canada’s Arctic

Answer 31

• 32 member co-ops
• 22,000 members
• 1,000 employees