Counting numbers is simple but adding and multiplying the same is difficult, however few geniuses
resolved this long back and came up with the salutation of accounting. Accounting is something that
will give you the best clarity on each penny you spent and gained.


Types of Society

There are two types of society –

  1. Limited liabilities society
  2. Unlimited liabilities society

Any member is not liable to pay more than the nominal value of the share held by him and no member can own more than 20% of the shares of society.

Today, government is encouraging co-operative societies to help society at large. Cooperative societies are operative in various sectors like consumer, industrial, services, marketing, etc.
Under accounting system of Co-operative societies, the term Receipt and Payment is used for two fold
aspects of double entry system.


Following accounts usually maintained by the Co-operative societies

Day Book (Journal)

Day Book (Cash Account)

Day Book (Cash Book with Adjustment Column)

Day Book (Journal)

Day book is a book of original entries. In a day book, all types of cash or non-cash transactions are recorded, according to the principle of double entry system. As per the practice followed in the co-operative societies, a separate journal book is not prepared rather all transactions are directly recorded in the day book. Day book has two sides Receipt (debit) and payment (credit) and there are two columns in each side of a day book, one for the cash transactions and second for the adjustment. Transaction for the cash receipt and cash payment are recorded in cash column and payment side respectively. Similarly, entries are done in debit and credit side of a day book in the adjustment column.

Day Book (Ledger for Cash Account)

Since, all the cash transactions are recorded directly in a day book, it might be called as ledger account of cash book.


In the co-operative societies, posting of ledger is not done on the double entry system. Receipt side of the day book on debit side of the ledger account and payment side of the day book posted on the credit side of the ledger account.

Closing of Ledgers

In the co-operative societies, balancing of a personal account is done at the time when any member clear his account or a new account is opened. Totals of all other accounts (receipt and payments) are kept as it is. Balancing of receipt and payment accounts are not required.

Receipt and Payment Account

A receipt and payment account is the summary of a day book and prepared for a specified period.

Receipt and payment account is prepared from the totals of receipts and payment sides of the ledger accounts.

Final Accounts

Trading & Profit and Loss account and Balance sheet are prepared from the receipt and payment accounting after consideration of the adjustment entries. Items appear under the receipt side are treated as income, and items of the payment side are as expenditure.

Rules Appropriated as

First 25% of the net profit should be transferred to the reserve fund account. As per section 35 of Co-operative Societies Act, 1912, distribution of the profit should not be more than 6.25%. Contribution to charitable funds as defined in section 2 of Charitable Endowment Act, 1890, which says that contribution may be done with the prior permission of the Registrar. Maximum contribution is restricted to 10% of the available profit, after transferring profit to reserve account.

Unlimited liabilities, co-operative society may distribute profit only after general or special order of the State Government

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