20 BULLETIN" 394, U. S, DEPARTMENT OF AGRICULTUEE. 



second, in the interest of the societies generally ; third, for the protection of 

 the creditors with whom the society may do business ; fourth, for the main- 

 tenance of the reputation of the cooperative movement. The true end and aim 

 of every system of audit being supervision, external check, and testimony, 

 experience proves the necessity of the officers of cooperative societies under- 

 standing the principles of bookkeeping, followed up by an efficient and strict 

 audit of accounts. With this end in view, we propose to lay down a treatise, 

 arranged in systematic order, placing fully before those who may consult these 

 pages a safe mode for auditing the transactions of societies. 



EQUIPMENT. 



The answers to the questions on mechanical equipment which are 

 summarized in Table VI are self-explanatory. They indicate that the 

 average cooperative store is about as well equipped as the average 

 store under private or corporate management. There was a wide 

 variation in the stores studied, however. The equipment ranged from 

 small, poorly lighted, and insanitary stores, without cash registers, 

 filing equipment, or any other mechanical convenience, to one or two. 

 of the most modern stores to be found in the United States (see PL I) . 



It was found that most of the managers appreciate the economy of 

 many of the devices entering into modern store equipment, and their 

 absence in a store is usually due to a lack of funds. There is also 

 a general demand among patrons of all classes for a store that is 

 up to date in its equipment and appearance. (See PL II.) To some 

 extent this demand would seem to be part and parcel of the modern 

 efficiency movement, which is reaching a considerable proi^ortion of 

 farm homes in the form of modem household conveniences and farm 

 appliances. 



THE BALANCE SHEET. 



Table YIII and Sections XIII and XIV of the questionnaire pre- 

 sent a summary of the resources and liabilities for 46 stores. The 

 most interesting figures are those showing the surplus, undivided 

 profits, and unpaid dividends, amounting to a total of close to 

 $460,000, or an average of almost $10,000 per store. From these fig- 

 ures it would appear that the stores are in a very prosperous condi- 

 tion. Only 4 stores out of 46 show a deficit aggregating $9,214. 

 Moreover, if to the -amount of average surplus, undivided profits, 

 and unpaid dividends, the capital stock of $15,948 is added, the 

 total average resources will exceed the average liabilities by $25,676. 



If the stores are in such splendid financial condition, why is it 

 that most of them are not paying regular dividends? The fact is 

 that for the majority of the stores this prosperity is more apparent 

 than real. In the first place, the stock carried is too large and the 

 average number of stock turns a year too low. Many of the stores 

 are carrying a lot of stock which is dead for the greater part of the 



