20 BULLETIN" 394, U. S. DEPARTMENT OF AGRICULTURE. 
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 PI. 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 proportion of 
farm homes in the form of modern household conveniences and farm 
appliances. 
THE BALANCE SHEET. 
Table VIII 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 Ioav. Many of the stores 
are carrying a lot of stock which is dead for the greater part of the 
