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ACCA Applied Knowledge · Business and Technology · The purpose and types of business organisation

A group of 200 farmers pool resources to jointly buy seed and equipment and to market their produce. Each member has one vote regardless of the amount invested, and surplus is distributed to members based on their use of the organisation. What type of organisation is this?

This is a cooperative. Members own and run it jointly for mutual benefit, each has one vote regardless of investment, and surplus is shared according to participation rather than capital. Companies vote by shareholding, and franchises involve licences, so neither fits.

  1. AA cooperativeCorrect
  2. BA public limited company
  3. CA franchise
  4. DA limited liability partnership with a sleeping partner

Explanation

Democratic one-member-one-vote control and distribution of surplus by member usage are hallmarks of a cooperative. A plc votes by shareholding and distributes by shares held. A franchise is a licence arrangement, not a member-owned body.

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