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Business LibreTexts

3.8: Summary

  • Page ID
    8777
  • Two of the three ways members participate in a cooperative or mutual are through benefits received and physical ownership. The impacts of

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    these on an individual member can be seen by observing the impact of the economic transaction between the member and the cooperative or mutual. These impacts can be traced through the income statement and balance sheet, and the decisions of the board of directors who are elected by the members and management are observable. Boards of directors create policies regarding income distribution and equity generation, which are embedded in principles contained in legal statutes and accounting standards. It is important for members to understand these concepts to fully understand the role of their membership in a cooperative or mutual and their impact on the decision-making by the board and management. Members participate in the control of the cooperative by electing directors who make these decisions on ownership and benefits on their behalf.