Specimen of Proposed Profit and Loss Appropriation Account

Proposed Profit and Loss Appropriation Account

In cooperative organizations, the Net Surplus transferred to the Profit and Loss Appropriation Account. The aim of this account is to show the disposal If the Surplus (profit) of the society for the current financial period. The proposed Appropriation must be in accordance with the cooperative Law and Regulations.

This account does not apply to the accounts of the Sole Trader. The various Cooperative Societies Laws make provisions for the appropriation of Surplus. Allocations made under these provisions are known as authorized allocations and therefore do not require the consent of members. The cooperative Laws of each State in Nigeria provides that 25% (i.e one quarter) of the Surplus of a Cooperative Society must be allocated to a reserve Fund, between 5% - 10% of the Surplus will be allocated to the Education Fund.

Apart from the statutory allocations, all other allocations of Surplus must be made with the consent of members.

These allocations are creditedto the relevant accounts. After meeting all the statutory provisions, the remaining surplus be return to the members that made them possible in accordance with the services rendered or patronage made by them. This could be achieved through some non statutory allocation listed below:

i. Bonus on patronage

ii. Interest on share capital

iii Committee Bonus

iv. Secretary honorarium

v. Provision for Entertainment

vi. General Reserve e.t.c

Note: That reserve fund is part of allocation of surplus of a registered cooperative society to meet unforeseen contingencies. It is created only if there is surplus, in other words 'no surplus, no Reserve fund'. It is a way of plugging back part of the surplus of the society while making provisions for a rainy day.

Also note that Education find is for continuous education of members and is also for the prevision of cooperative awareness to the men-ibers and general public. This could be achieved through seminars, symposia, trainings, film shows etc. These programmes are expected to be met from Education fund.

General Reserve: Any balance left from the Net Surplus is passed into this account.

Specimen of Proposed Profit and Loss Appropriation Account