Utah FFA True/False

(T/F) Section 521 cooperatives do not need to pay corporate income tax on equitybased dividends. This gives these cooperative a substantial advantage over investor-oriented firms.

True

(T/F) Cooperatives can only fulfill their members needs when the costs are the highest facing the cooperative.

False

(T/F) If the association is a capital stock organization, members receive stock certificates as evidence of their ownership interest and more than one type of stock may be issued.

True

(T/F) Cooperatives usually do not incorporate under state law which would include filling an article of incorporation, which grant them the right to do business.

True

(T/F) Cooperatives usually do not incorporate under state law which would include filling an article of incorporation, which grant them the right to do business.

True

(T/F) The Attorney General of the United States is specified under Section 2 of the Capper-Volstead act as the person designated to enforce the Act to ensure that there is no undue “price enhancement” as a result of farmers acting together to market their products.

False

(T/F) Cooperatives qualifying under Section 521 of the IRS code are required to pay 100% of their patronage refunds to members in cash in order to maintain their tax-exempt status.

False

(T/F) Cooperative structure can be classified into five types as follows: geographic, governance, functions, financial, and other arrangements.

True

(T/F) A cooperative principal is an action that supports, complements, or carries out a principal.

True

(T/F) If member-users have 100 percent of the voting rights, it means that they must have all the control of the cooperative.

False

(T/F) The way a cooperative is organized determines how it is operated, managed, and controlled by its members, and the types of benefits offered.

True

(T/F) The chief executive officer, usually referred to as the manager is selected by all members of the cooperative.

False

(T/F) You are a centralized cooperative if there are individual producers that make up the membership.

True

By joining together with other cooperatives you are losing stability and purchasing power in the ability to gain necessary equipment

False

One of a purchasing cooperative’s objectives is to reduce production costs for members through quantity purchasing, manufacturing, and distributing, procuring quality products, and providing related services as needed.

True

Today’s three contemporary principles of the cooperative form of business are: User-Owner Principle, User-Control Principle, and User-Benefits Principle.

True

The Capper-Volstead Act specifies that agricultural producers may act together in marketing their products if the products of nonmembers who market through the cooperative make up of a value of no greater than 60% of all the products the cooperative sells.

False

A regional cooperative usually operates in a relatively small geographic area, typically within a radius of 10 to 30 miles.

False

The board of directors is the central element of producer control in a cooperative, where directors are elected by the members to create policies and oversee the implications.

True

Some indirect benefits to members are leadership development, business knowledge, and social recognition.

True

Producers are unable to act together even within their own association to have a common marketing agency that they are working with.

False

Improve bargaining power, reduce costs, obtain products and services, create new and expand existing markets, improve qualities of products, and increase incomes are reasons why cooperatives are organized.

True

Clearly Identifying your economic need, developing good leadership, , and following sound practices improve the chance of success for cooperatives.

True

Most State cooperative incorporation statutes limit the proportion of business a cooperative can conduct with non-members to 50 percent.

True

The members of a mixed cooperative are local cooperatives, operated by a manager hired by and responsible to local boards of directors.

False

Ownership is expressed by equity investment in the enterprise and a claim on its assets.

True

A Marketing Agency-in-Common, organized by two or more marketing cooperatives, handles and arranges the sale of its member’s products.

False

Interregional or national cooperatives are organized, owned, and controlled by regional cooperatives, usually to provide specific services. They may serve a major portion or virtually all of the United States.

True

Before the passage of the Capper-Volstead act, farmers could lawfully unite to collectively market their products.

False

Control can be forfeited if the members and directors fail to exercise proper oversight and review of hired management.

True

The Capper-Volstead act is only reviewed every 4 years

False

Capital for the cooperative may be raised by members purchasing stock (equity) and borrowing funds (debt) from a lending institution.

True

The First Annual Meeting of Cooperative has the aim to hire a cooperative manager.

False

According to the democratic control principle, member control recognizes that members can control a cooperative either through one vote per member or through a voting system that relates to the size of patronage each member does with the cooperative.

True

Cooperatives are not organized as corporations under state law but do have a general governance system based on a corporate model.

False

If a cooperative is trying to raise equity capital, it shouldn’t sell underperforming or redundant assets because these assets will probably be sold at a low value and not raise much capital.

False

A cooperative is the only form of business that is expected to systematically return equity to owners.

True

Market pooling means that members of the cooperative purchase farm supplies jointly and reduce costs because they buy in large volumes.

False

A federated cooperative is a cooperative of cooperatives

True

Operating at-cost doesn’t mean the cooperative doesn’t make a profit but means that all profits are refunded to members through patronage refunds.

True

A subsidiary is a corporation organized, owned, and controlled either totally or partially by a parent cooperative.

True

Direct member benefits from a cooperative include: leadership development, social recognition, and business knowledge.

True

Before the passage of the Capper-Volstead Act, farmers were persecuted for acting together to market their products.

True

If member-users have 100 percent of the voting rights, it means that they must have all the control of the cooperative.

False

One challenge facing cooperatives today is that there are fewer “intermediate” sized farms, which most closely resemble the traditional farm families that cooperatives were initially built to support.

True

A regional cooperative usually operates in a relatively small geographic area, typically within a radius of 10 to 30 miles.

False

Today’s three contemporary principles of the cooperative form of business are: User-Owner Principle, User-Control Principle, and User-Benefits Principle.

True

Because cooperatives are designed to serve member-patrons, it is necessary to continually educate cooperative members about what the cooperative does so that they will remain supportive.

True

Managers in cooperatives are responsible mostly for short-run decisions in the cooperative while the board of directors is responsible for long-run decisions.

True

Cooperatives can be classified as centralized, federated, non-centralized, or nonfederated.

False

In cooperatives, direct benefits to members are policing the marketing of goods and services, leadership development, business knowledge, and social recognition.

False

A cooperative is usually organized to deal with general economic conditions, and not specific problems.

False

A holding company has controlling ownership in two or more businesses. The holding company does not typically generate revenues through its own operations, but only through the companies it controls.

True

The Capper-Volstead Act provides limited antitrust exemption to associations of producers.

True

The steering committee should arrange for completion of an in-depth business plan prepared by a professional familiar with cooperative organization.

True

State statutes, Capper-Volstead, and Section 521 limit cooperative members to producers of agricultural products.

True

Section 521 cooperatives do not need to pay corporate income tax on equity-based dividends. This gives these cooperative a substantial advantage over investororiented firms.

True

The Capper-Volstead Act protects the general public against the possibility of undue price enhancement as a result of any monopoly position that a group of producers could legally achieve by getting together.

True

In a cooperative, ownership is expressed by the ability to exert authority over decisions-making process while control is expressed by equity investment in the cooperative.

False

Cooperatives are always relatively small organizations, so that each member is important.

False

A cooperative is owned by its members

True

In most cooperatives, control is maintained through the hiring/firing power of the board of directors.

False

If the association is a capital stock organization, it issues some kind of certificate to show capital contributions of members.

False

The Rochdale Equitable Pioneers’ Society frowned upon the formation of cooperative businesses.

False

Members of cooperatives elect directors at their annual meeting to run the cooperative for them. Usually each director is assigned a department to operate on a day-to-day basis, such as sales, feed, petroleum, etc.

False

At the first meeting of the cooperative, members must approve the bylaws and elect the board of directors.

True

The Capper-Volstead Act specifies that agricultural producers may act together in marketing their products if the products of nonmembers who market through the cooperative make up of a value of no greater than 60% of all the products the cooperative sells.

False

Interregional or national cooperatives are organized, owned, and controlled by regional cooperatives, usually to provide specific services.

True

It is not common practice to require that all members of the cooperative to invest capital in the business.

False