Managing the account of co-operative society is more than just a financial chore. It’s about maintaining transparency, promoting accountability, and ensuring that your community’s finances are secure and well-managed.
we’ll walk you through what an income and expenditure account is, why it’s essential, how to prepare it, and the common pitfalls to avoid. Whether you’re a newly elected RWA member or a long-time treasurer, this blog is your go-to reference for understanding and preparing the account of co-operative society.
What is an income & expenditure account?
The account of co-operative society, specifically the income and expenditure account, is a statement prepared annually to reflect the society’s financial performance. It outlines:
- The income earned (like maintenance charges, interest)
- The expenditure incurred (like repairs, salaries, electricity)
- Whether the society ended the year with a surplus or deficit
Unlike businesses, cooperative societies are not run for profit. So instead of a “Profit and Loss” statement, they use this income and expenditure account to show how funds were used for the collective benefit of members.
The account is prepared on an accrual basis, meaning all incomes earned and expenses incurred within the year are included even if not actually received or paid yet.
Key parts of a society’s finance sheet
Here’s a breakdown of what typically goes into the income and expenditure account of co-operative Society:
Income sources:
- Maintenance charges collected from members
- Interest income from savings or fixed deposits
- Rental income from guest houses, party halls, etc.
- Miscellaneous receipts (e.g., penalties, late fees)
- Donations, if any
- Subsidies or grants from the government
Income heads:
- Electricity bills for common areas
- Water charges
- Repair and maintenance (e.g., painting, plumbing)
- Security staff salaries or vendor payments
- Audit fees
- Bank charges
- Administrative expenses (e.g., stationery, software)
- Depreciation of assets (like lifts or equipment)
The key is to ensure accurate categorization to reflect the real financial picture.
How to Prepare the income and expenditure account of co-operative society
Here’s how RWAs or treasurers can go about preparing the income and expenditure account:
1. Collect all financial data
Start with gathering receipts, invoices, bank statements, cash book entries, vouchers, etc.
2. Segregate revenue and capital transactions
Capital expenses (like new lift installation) are not recorded here. Only operational, recurring transactions make it into the income and expenditure account.
3. Accrual adjustments
Make provisions for:
Expenses incurred but not paid (e.g., pending electrician bill)
Income earned but not received (e.g., rent due)
Depreciation of fixed assets
4. Check for consistency with previous year’s account
Compare this year’s numbers with last year’s. Flag sudden increases or decreases in any expense or income head.
5. Calculate the net result
Add up all incomes and subtract total expenses to get your surplus or deficit.
As per the Maharashtra Co-Operative Societies Act, 25% of the surplus must go into the reserve fund.
6. Review & finalise with the auditor
The draft account should be reviewed by the management committee and then audited by a certified auditor.
7. Present at the AGM
The audited account, along with the balance sheet and budget for the next year, must be presented and approved during the Annual General Meeting.
Why the income and expenditure account of co-operative society matters
This isn’t just a legal requirement, it’s the financial foundation of your society.
1. Transparency
Residents can see how funds are used, which builds trust.
2. Informed budgeting
Last year’s expenses help forecast the new year’s budget and decide on maintenance charges.
3. Compliance
Statutory bodies require proper financial records. Missing or incorrect statements can attract penalties or disqualification.
4. Internal monitoring
Helps identify over-expenditure, misallocation of funds, or areas where costs can be reduced.
What are the Common mistakes to avoid?
Even with the best intentions, societies often make these errors:
1. Incorrect data entry
Wrong amounts or misposted transactions can skew the entire report.
2. Misclassification
Capital expenses shown under routine maintenance can mislead readers.
3. Missing documents
The lack of supporting vouchers or receipts makes audits difficult and raises doubts.
4. Reconciliation gaps
Cash books, bank statements, and ledger entries must match—down to the rupee.
5. Ignoring accruals
Unpaid bills and receivables should be accounted for even if cash hasn’t moved yet.
Making accounting easy for co-operative societies with Mygate
Gone are the days of bulky registers and manual calculations. Mygate’s accounting and billing features simplify every step of managing the income and expenditure account of co-operative society:
Smart bookkeeping
Digital ledgers auto-update as transactions happen. No manual entry, no Excel headaches.
Instant reports
Get real-time Income and Expenditure Accounts, Balance Sheets, and Trial Balances with just a click.
Member transparency
Residents can view their dues, bills, and receipts via the app—no more asking the treasurer for updates.
Automated reminders and invoicing
Maintenance bills are generated and sent out automatically. Members get reminders to pay on time.
GST and TDS Compliance
All taxes are auto-calculated and updated. Say goodbye to legal worries.
With Mygate, even societies with minimal financial know-how can manage their books with accuracy and ease.
When & how often should the income and expenditure sheet should be prepared?
The income and expenditure sheet is typically prepared once a year, aligning with the financial year (April to March). However, quarterly or monthly internal reviews are a great practice to detect anomalies early and keep finances in check.
Final checklist before submission
- All receipts and vouchers are filed
- Expenses and incomes are properly categorized
- Accrual entries (outstanding/prepaid) are added
- The final account is audited
- Report presented to members during AGM
- Required filings are made with the registrar
Creating the Income and expenditure account of the co-operative society isn’t just about number crunching it’s a vital responsibility that impacts every resident. Done right, it promotes transparency, ensures legal compliance, and helps your society thrive financially.
Whether you’re an RWA member or a society treasurer, these small efforts in accounting will lead to big trust from the community.
With Mygate ERP, managing your society’s books becomes a breeze leaving you more time to focus on what matters: building a better, more transparent community.
