Cooperative Organisation — Practice Quiz

A is true, but R is false.

Step 1: Evaluate Assertion A – In cooperative societies, profits (after statutory reserve and dividend) are distributed based on the volume of business transacted (purchases or sales) by each member, not capital held. This is TRUE. Step 2: Evaluate Reason R – Cooperative societies follow 'ONE MEMBER, ONE VOTE', NOT 'one share, one vote'. The 'one share, one vote' principle belongs to joint stock companies. Step 3: Since R contains a factually incorrect statement (wrong voting principle), R is FALSE. Step 4: Since A is true but R is false, option C is correct. Step 5: This is a common confusion

10 members

Step 1: Recall the comparative details between joint stock companies and cooperative societies. Step 2: A private company requires at least 2 members, and a public company requires at least 7 members. Step 3: A cooperative society requires at least 10 members to be formed. Step 4: The maximum membership of a cooperative society is unlimited, similar to a public company. Step 5: Specifically for credit cooperatives, the chapter also states a maximum membership of 100 persons, while the minimum remains 10. Options A (2) and B (7) refer to company membership thresholds, not cooperative societies.

Shares are not freely transferable but can be returned to the society with permission of office bearers.

Step 1: Identify the key difference in share transferability between the two forms. Step 2: In a public joint stock company, shares are freely transferable on the stock exchange, which is a major advantage for liquidity. Step 3: In a cooperative society, shares are NOT freely transferable. This prevents outside speculation and maintains the community-based character of the society. Step 4: A member can only surrender/return his shares to the society itself, and only with the permission of the society's office bearers. Step 5: This restriction ensures that membership remains within the intended

Inefficient management

Step 1: Identify the cause-effect relationship in the question – elected members lacking managerial skills leads to which disadvantage? Step 2: 'Lack of capital' relates to the small financial contribution of members, not managerial skills. Step 3: 'Government interference' relates to regulations and audits imposed by the government. Step 4: 'Lack of elasticity' means inability to use flexible sales methods like credit sales or home delivery. Step 5: 'Inefficient management' directly results from the fact that the management committee is elected from the general membership, who may not have ad