Which of the Following Is Correct with Regard to Cooperatives

question 214

Short Answer

Which of the following is correct with regard to cooperatives?
Cooperatives are not allowed to deduct patronage refunds to members out of before-tax income.
Members have an incentive to invest in equity capital of the co-operative.
Voting and financial control of the cooperative is typically held by a few wealthy individuals.
Double taxation affects cooperatives more negatively than corporations.
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:

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The point in business where revenues equal expenses, resulting in no net loss or gain.

Mark-up

Extra costs applied to the basic price of goods for overhead absorption and profitability.

Overhead Expenses

Ongoing costs of operating a business that are not directly associated with the production of goods or services, such as rent, utilities, and administrative costs.