State two features of a cooperative.

Using Table 3 and the information provided above, prepare a monthly cash-flow forecast for LLC for the first four months of operations.

Two features include:

• A cooperative society works on the principle of sharing and welfare. If any surplus (or loss) is generated, it is distributed/shared amongst the members (shared profits or losses of members).
• An elected managing committee has the power to take decisions. Members have the right to vote, by which they elect the members who will constitute the managing committee (shared decision-making between members).
• There is limited liability of the members of a cooperative society. Liability is limited to the extent of the amount contributed by members as capital (limited liability of members).

Accept any other relevant feature.
An explanation is not required.

Award [1] for each correct feature stated. Award a maximum of [2].
Application is not expected.

N.B. Whilst the command term is “features” it is also true that some features may also be advantages.

N.B. Allow candidate own figure rule (OFR): if a candidate makes an error in one row and carries it through the remainder of the forecast, that is only one error. This provision includes both mathematical errors and conceptual errors (for example, if a candidate includes the credit sales for January in this month, it is one error) and candidates should only lose [1] for that error.

Award [1] if the candidate has some idea of what a cash-flow forecast is and looks like.

Award [2] for a cash-flow forecast that has some problems in layout and wording and which has more than three errors/mistakes (apply OFR), which could include in addition to number placement problems and mathematical errors, or conceptual errors, or omissions, such as not having a line like “closing balance”.

Award [3] for a largely correct cash-flow forecast that has some minor problems with layout, wording and calculations, which has three mistakes (apply OFR).

Award [4] for a largely correct cash-flow forecast that has some minor problems with layout and wording and which has up to two mistakes (apply OFR) or the candidate does not produce a mathematically correct cash flow.

Award [5] for a mathematically correct cash-flow forecast that has up to one calculation error, or some omission of the wording above.

Award [6] for a fully correct cash-flow forecast with a generally accepted format and lines for total inflows/receipts, total outflows/payments (or some other acceptable wording), a line for net cash flow/inflow, etc., and lines for opening and closing balance.

Substituting the term “net profit” in the cash-flow forecast for “net cash-flow” is inaccurate and [1] should be deducted.
Cash sales and credit sales need not be separated.

This question was generally poorly answered with few candidates understanding the difference between "members" and "shareholders". Other common mistakes were "non-profit" or "cooperation" between several different businesses. Many responses could have applied to any business structure.

It was pleasing to see that overall the understanding of cash flow has improved from previous sessions. The presentation format was better. However, a significant number of candidates did not understand the difference between sales and cash flow including the former in their forecast giving rise to big errors on the "total cash inflow" at the start. Also, many candidates incorrectly calculated cost of goods sold (COGS) based on cash sales rather than total sales.