Which of the Following Is Correct with Regard to Co-Operatives

question 117

Multiple Choice

Which of the following is correct with regard to co-operatives?

• A) Co-operatives are not allowed to deduct patronage refunds to members out of before-tax income.
• B) Members have an incentive to invest in equity capital of the co-operative.
• C) Voting and financial control of the co-operative is typically held by a few wealthy individuals.
• D) Double taxation affects co-operatives more negatively than corporations.
• E) The democratic voting arrangements and dividends based purely on patronage discourage some entrepreneurs from forming or joining a co-operative.

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Definitions:

Stockholders' Equity

The value remaining in a company after liabilities are deducted from total assets; also known as shareholder's equity.

Paid-in Capital

Refers to the funds raised by a company through the issuance of shares. This capital is provided by shareholders in exchange for equity in the company.

Preferred Stock

Preferred stock is a type of stock that grants holders certain priorities over common stock, including dividends and asset liquidation, often without voting rights.

Common Stock

A type of equity security that represents ownership in a corporation, giving shareholders voting rights and a share in the company's profits through dividends.