Advanced financial accounting mcom

1
A PROJECT
ON
“Accounting and auditing of Hari leela co-op. housing society Ltd., New Panvel (E)”
In the subject Advance Financial Accounting
SUBMITTED TO
UNIVERSITY OF MUMBAI
FOR SEMESTER-II OF
MASTER OF COMMERCE
BY
SUNITA KUMARI YADAV
MCOM PART-I AND ROLL NO- 1890
UNDER THE GUIDANCE OF
Ms. FATEMA
YEAR- 2012-2013

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DECLARATION BY THE STUDENT
I, SUNITA KUMARI YADAV student of M COM PART-I Roll Number 1890 hereby
declare that the project for the Paper Advance financial Accounting titled,
“Accounting and Auditing of Hari leela co-op. housing society Ltd., New Panvel (E)”
Submitted by me for semester-II during the academic year 2012-2013, is based on actual
work carried out by me under the guidance and supervision of Ms. FATEMA.
I further state that this work is original and not submitted anywhere else for any
examination.
Signature of Student
EVALUATION CERTIFICATE
This is to certify that the undersigned have assessed and evaluated the project on
Submitted by SUNITA KUMARI YADAV Student of M COM Part-I.
This project is original to the best of our knowledge and has been accepted for internal
assessment.
Internal Examiner External Examiner vice Principle

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PILLAI’S COLLEGE OF ARTS, COMMERCE & SCIENCE
Internal Assessment: Project 40 Marks
Name of Student Class Division Roll
Number.
First Name: SUNITA KUMARI
M COM
Father’s Name: BBS PART I 1890
Surname: YADAV
Subject: Advance Financial Accounting
Topic for the Project:
Mark Awarded Signature
DOCUMENTATION
Internal Examiner
(Out of 10 Marks)
External Examiner
(Out of 10 Marks)
Presentation
(Out of 10 Marks)
Viva and Interaction
(Out of 10 Marks)
TOTAL MARKS (Out of 40)

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CHAPTER
NO.
TOPIC PAGE
NO.
1. Introduction
 MEANING
 Non-profit organization
 Co-operative year
2. Book of account to be maintained
3. Advantage and disadvantage of co-operative society
 Advantage of co-operative society
 Disadvantage of co-operative society
4. Formation of co-operative society
5. AUDIT REPORT
 Part-I(introduction)
 Part-II (remark and suggestion)
 Audit report
(Maharashtra state cooperative act 1960 section no.
81(5-B) & rules 69)
6. Comparative balance sheet
7. Conclusion

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 MEANING
A co-operative Society is a body corporate with perpetual succession. It can acquire, hold and
dispose off properties, enter into contracts and it can sue and it can be used. In the state of
Maharashtra a society is formed, regulated and governed and controlled by the Maharashtra Co-
operative Societies Act, 1960. (Section 36 of M.C.S. Act, 1960).All the Co-operative Societies
have to maintain the records as per the Maharashtra Co-operative Societies Act, 1960, M.C.S.
Rules, 1961 and the Byelaws of the Society.
 NON-PROFIT ORGANISATIONS
There are certain institutions whose main aim is not to earn profit. They are established to
provide services and their sole motto is to render services, e.g., schools, libraries, sports clubs,
hospitals and professionals like, doctors, lawyers, chartered accountants, company secretaries
and co-operative housing societies, etc. Though the main aim of these bodies is not to earn profit
but still they are interested in knowing whether their current income is more than the current
expenses or not. They are also keen in knowing the financial position of their concern. Co-
operative Societies are not charitable societies. They carry on Economic Activities. The profit is
not the motive but the proper accounts need to be maintained and presented before the members
for their approval in the Annual General Body meeting. The same need to be properly audited as
per the provisions of the Act.
 CO-OPERATIVE YEAR
Earlier the accounting year for Societies was a year ending on 30th June or other day fixed by a
particular society with the Approval of the Registrar. However, with the amendment made in
1993, the Co-operative year has been compulsorily made to end on 31st day of March.

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 BOOK OF ACCOUNT TO BE MAINTAINED
 ACCOUNT
An account is formal presentation of the transactions pertaining to an item or person or an
income or expense. An account is generally prepared in T form wherein the left hand side is
called the debit side and the right hand side the credit side. All accounts (except the cash or
bank), which are maintained in cashbook, are maintained in ledger.
 ACCOUNTING YEAR
The erotically speaking a business may adopt any period of 12 months as its accounting year
except for first accounting year which may be less or more than a period of 12 months. Under
income tax act however every person is required (W.E.F 1.4.1989) to adopt a uniform
accounting year i.e. financial year, commencing on 1st April and ending on 31st march next
year. Accordingly, since 1993, the co-operative year also has been changed to Financial Year.
 Provisions under Bye-laws of Co-operative Housing Societies
As per bye law no 142 and as per standard accounting principles following accounts books need
to be maintained in respect of the financial transaction of the society.
a) The cash and the bank book
b) The general ledger
c) The personal ledger (member wise monthly collection register)
d) Bill register (month wise charges register)
e) Expense vouchers with receiver’s signature, authorization to pass vouchers and corresponding
bill and receipt
f) Monthly /quarterly bills raised on the members for outgoings of the society.
g) Receipts of the collection of charges transfer fees and other funds of the society.
h) Bank passbook, check issued with counter files ,pay in slips book of the bank.
i) Issues of individual pass books issued to the members in respect of their transaction with the
society

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Advantages of Co–operative Society
A Co-operative form of business organization has the following advantages:
1. Easy Formation: Formation of a co-operative society is very easy compared to a joint
stock company. Any ten adults can voluntarily form an association and get it registered
with the Registrar of Co-operative Societies.
2. Open Membership: Persons having common interest can form a co-operative society.
Any competent person can become a member at any time he/she likes and can leave the
society at will.
3. Democratic Control: A co-operative society is controlled in a democratic manner. The
members cast their vote to elect their representatives to form a committee that looks after
the day-to-day administration. This committee is accountable to all the members of the
society.
4. Limited Liability: The liability of members of a co-operative society is limited to the
extent of capital contributed by them. Unlike sole proprietors and partners the personal
properties of members of the co-operative societies are free from any kind of risk because
of business liabilities.
5. Elimination of Middlemen’s Profit: Through co-operatives the members or consumers
control their own supplies and thus, middlemen’s profit is eliminated.
6. State Assistance: Both Central and State governments provide all kinds of help to the
societies. Such help may be provided in the form of capital contribution, loans at low
rates of interest, exemption in tax, subsidies in repayment of loans, etc.
7. Stable Life: A co-operative society has a fairly stable life and it continues to exist for a
long period of time. Its existence is not affected by the death, insolvency, lunacy or
resignation of any of its members.

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Disadvantages of Co–operative Society
1. Limited Capital: The amount of capital that a cooperative society can raise from its
member is very limited because the membership is generally confined to a particular
section of the society. Again due to low rate of return the members do not invest more
capital. Government’s assistance is often inadequate for most of the co-operative
societies.
2. Problems in Management: Generally it is seen that co-operative societies do not
function efficiently due to lack of managerial talent. The members or their elected
representatives are not experienced enough to manage the society. Again, because of
limited capital they are not able to get the benefits of professional management.
3. Lack of Motivation: Every co-operative society is formed to render service to its
members rather than to earn profit. This does not provide enough motivation to the
members to put in their best effort and manage the society efficiently.
4. Lack of Co-operation: The co-operative societies are formed with the idea of mutual co-
operation. But it is often seen that there is a lot of friction between the members because
of personality differences, ego clash, etc. The selfish attitude of members may sometimes
bring an end to the society.
5. Dependence on Government: The inadequacy of capital and various other limitations
make cooperative societies dependant on the government for support and patronage in
terms of grants, loans subsidies, etc. Due to this, the government sometimes directly
interferes in the management of the society and also audits their annual accounts.

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a) Formation of Co-operative Housing Society:-
Practically every developer has to form a Co-operative Housing Society at one point of time or
another. With the limited amount of options available with regard to management of the affairs
of the building i.e.
 Condominium
 Private Limited Company and
 Co-operative Society, (excluding the unrealistic rental housing)
it will not be an exaggeration to state that in at least 90% cases particularly in Mumbai the
Promoters and/or the Builders have formed a Co-operative Housing Society.
 There are basically four types of Co-operative Housing Societies connected with the housing.
(a) Open Plot Societies- members purchase or take one lease a plot of land and they construct
the building.
(b) Flat Owners Societies- When a builder constructs flats and sells them to Flat Owners, the
Society when formed is called Flat Owner’s Society
(c) Tenant Societies- When Landlord forms a Society of tenants, it is called Tenants Society.
(d) Housing Board Societies- When a Society is formed by Allotted of flats and building is
constructed by the Housing Board Authorities, i.e. Mumbai Housing and Development Board,
then the Society so formed is of the type of Housing Board Society
 The procedure for Registration of a society begins with electing a Chief Promoter in a meeting of
the Promoter.

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 Normally, the name reservation proposal should be accompanied with the signature of at least 10
Promoters who have attended the meeting. It is a common belief that the Society should consist
of at least 10 members.
 ‘Flat means a separate set and self-contained set of premises used or intended to be used or
intended to be used for residence, or office or show-room, or shop, or go down and includes a
garage, or dispensary, or consulting room, or clinic, or flour mill, the premises forming part of a
building and includes an apartment’.
 The Chief Promoter should submit Registration Proposal to the Registering Authority within a
period of 3 months from the date of issue of Letter of Reservation in the name of the proposed
Society.
 The documents that are normally to be submitted to the Registering Authorities are as under :-
1. Application for registration of Society in Form A along with Statement A. Enclosure to
application for Registration as per Rule 4(1) of Maharashtra Co-operative Societies Rules, 1961.
2. Information about proposed society in Statement ‘B’ (vide Govt. Circular dated 2-5-1980).
3. Information about promoter members of the proposed society in Statement ‘C’ (vide Govt.
Circular Dt. 2-5-1980).
4. A Statement of Accounts as per Form D.
5. Model Bye-laws.
6. Bank Balance Certificate.
7. R.B.I. / Treasury Challan for payment of Registration Fee of Rs. 500/-.

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8. Title Clearance Certificate from an Advocate
9. A true copy of the approved Building Plan.
10. Letter of Authority Granting permission to commence construction work/Completion
Certificate (if applicable).
11. Affidavit on Rs. 20/- Stamp Paper from at least 10 promoter members to the effect that they
are residing in the area of operation of the Society (Proposed), made before a Competent
Authority.
12. Affidavit from the Chief Promoter on Stamp Paper of Rs. 20/- executed before the
Competent Authority in form ‘Y’.
13. Certified True Copy of agreement made on Stamp paper and registered between the builder,
promoter and purchasers of flat.
14. Where the promoter members are firms/ companies, a letter of authority from such
firms/companies authorizing the promoter to sign on behalf of firm/company.
15. In case of such proposed societies, names of 60% of the flat holders of the total number of
flats constructed or proposed to be constructed as per the plan approved, must be included in
Statement ‘A’ to be attached to the Registration Proposal.

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b) Stamp duty:-
Present rates of stamp duty for residential premises in the city of Mumbai are RS. 38,750/- on
Rs. 10, 00,000/-. Thereafter it is @ 8% for the additional value. The rate of stamp duty for
shops/Galas/office Premises and Garage even if used for car parking is 10% in Mumbai Stamp
duty has to be paid on the agreement Value or the market value of the property whichever is
higher. Stamp duty has to be paid every time the flat is being sold. Stamp duty has to be paid
even if it is a transfer within family.
c) Registration of Documents:-
The documents have to be registered within a period of fours months from the date of its
execution. The parties can go to the office of the Joint Sub-Registrar individually /collectively to
register the document. If for certain reasons the parties cannot attend the office of the sub-
Registrar within a period of the four months then in such cases the parties can execute a deed of
confirmation and complete the registration formalities.
d) Stamp paper:-
As per the amendment of section 34 of the Bombay Stamp Act 1958, the stamp paper should be
in the name of one of the parties executing the document.

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PART-I
INTRODUCTION
The statutory audit of Hari leela co-op. housing society Ltd., New Panvel (E)
Taluka- Panvel, dist- Raigad has been completed in the basis of records produced to me by the
disignitories of the society, oral explanation given by them and on my total knowledge.
The financial statement at the end of the audit period prepared the disignitories of the society are
attached herewith which will give the idea of financial position of the society.
1. MEETING:- (01-04-2009 TO 31-03-2011)
A. First general body meeting: N.A.
B. General meeting date:- --
C. Managing committee meetings :- --
D. Special general body meeting :- --
2. MEMBERSHIP:- as per the list there are 18 members in the society
3. RECTIFICATION REPORT:-
the society should submit the audit rectification report within in three month of receipt of
audit report.
4. ANALYSIS OF BALANCE SHEET: - (31-03-2011)
A) LIABILITIES SIDE:-
(01) SHARE CAPITAL:-
(a) share paid up share capital:- 4500/-
(02)RESERVE AND OTHER FUND:-
(a) reserve fund:- Rs. 60770 amount received as entrance fee, transfer premium,
transfer fee transferred to reserve fund as per BYE-LAWS.
(03) INCOME & EXPENDITURE A/C:- surplus balance as per balance sheet for
year ended 31-03-2011 Rs. 1,45,788/-

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(B) ASSETS SIDE:-
(01) CASH & BANK BALANCE:-
(a) cash in hand Rs. 9,683.00
(b) The R.D.C.C. Bank, New Panvel Br.(C.P) Rs.4,420.00
(c) abhyudaya Co-op. bank Rs. 23,570.00
(d) The R.D.C.C. Bank, New Panvel Br. Rs 30,212.00
the above balance are correct as per cash book and bank pass book as on 31-03-2011.
(02) INVESTMENT & DEPOSITS:-
(a) fixed deposits Rs. 1,30,000/-
(b) sinking fund F.D. Rs 4,000/-
(03) FIX ASSETS:-
(01) dead stock :- Rs. 9,273/-
kept dead stock register and record dead stock in dead stock register.
5. AUDIT CLASSIFICATION:-
taking into consideration the financial position and over all working of the society has
been awarded “B” audit class for financial year 01st
april 2009 to 31st
march 2011.
6. ACKNOWLEGEMENT:-
we are thankful to the members of managing committee for their co-operative during the
audit.

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PART-II
REMARK AND SUGGESTION
1) To be making provision of major repair fund as per Bye-Laws 13(b) of each member
on squire fir basis or value of cost which is decided in general body meeting and
invested as fixed deposit in RDCC bank.
2) Monthly meeting of committee and annual general body should be conducted as per
the laws, with prior agenda to each member. Minutes of general body meeting and
committee meeting should be recorded in register (two separate register).
3) Collect registered agreement from all members of society and take building cost those
units in balance-sheet.
4) Every voucher should be signed by chairman, secretary or treasurer.
5) Member information register form “T” and member registration register form “J”
should be update time to time.
6) Close the saving account of chief promoter Raigad district central co-op. bank Ltd,
New Panvel
7) Cash in hand to be maintained as stated in bye laws and shall make necessary
transaction of payment by cheque only.
8) Audit should be done after ending of every financial year.

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Hari leela co-op. housing society Ltd., New Panvel (E)
RECEIPT AND PAYMENT for the year ended 01-04-09 to 31-03-2010
RECIEPT Rs. PAYMENT Rs.
Opening cash/bank balance 1270 Maintenance & repair 30713
R.D.C.C. bank 206219 Stationery and Xerox 672
Abhyudaya co-op. bank 20251.50 Pest control 1000
RDCC bank
(chief promoter)
4420 Water bill 27846
Electric bill 950
Bonus 2200
Member contribution 178995 Meeting 2292
Water, shed & color 168930 Bank charge 211
Transfer premium 30000 Crack filling, shed & coloring 293700
Bank interest 3288 Flooring work 7000
Fix deposit 80000
Salary 24200
Festival & pooja exp 12548
Plastic tank 15250
Closing cash balance 6021
R.D.C.C. bank 81583
Abhyudaya co-op bank 22767.50
RDCC bank (chief promoter) 4420
TOTAL 613373.50 TOTAL 613373.50

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INCOME & EXPENDITURE for the year ended 01-04-09 to 31-03-2010
INCOME Rs. EXPENDITURE Rs.
Member contribution 178995 Maintenance & repair 30713
Water, shed & color 168930 Stationery and Xerox 672
Recovery in Yr
168930
Pest control 1000
(+) trf. From B/S recovery Water bill 27846
In last Yr.
135433
Electric bill 950
Bonus 2200
Bank interest 3288 Meeting 2292
Bank charge 211
Crack filling, shed & coloring 293700
Flooring work 7000
Plastic tank 15250
Salary 24200
Depreciation(dead stock) 2573
Surplus balance 65491
TOTAL 486646 TOTAL 486646

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BALANCE SHEET for the year ended 31-03-2010
LIABILITIES Rs. ASSETS Rs.
Paid up share capital 4250 Closing cash/bank balance 6021
Reserve and other fund R.D.C.C. bank 81583
Reserve fund 30770 Abhyudaya co-op bank 22767.50
(+) trf. Premium 30000 60770 RDCC bank (chief promoter) 4420
Member contribution -- Investment & deposit
Fixed deposit 80000
Current liabilities & provisions -- Current assets, loans &
advances
--
Income & expenditure A/C Fixed assets
Surplus balance 74571.50 Dead stock
12864
(+) surplus in Yr. 65491.00 140062 (-) depreciation 2573 10291
TOTAL 205082.50 TOTAL 205082.50

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RECEIPT AND PAYMENT for the year ended 01-04-10 to 31-03-2011
RECIEPT Rs. PAYMENT Rs.
Opening cash/bank balance 6021 Maintenance & repair 27431
R.D.C.C. bank 81583 Sinking fund F.D. 4000
Abhyudaya co-op. bank 22767 Pest control 2500
RDCC bank (chief promoter) 4420 Water bill 30844
Electric bill 24590
Bonus 1250
Member contribution 139800 Meeting 849
Water, shed & color 76500 Bank charge 40
Sintex tank refund 4024 Shed work 73900
Bank interest 2403 Dead stock 1300
Member share 250 Fix deposit 50000
Member entrance fee 100 Salary 32200
insurance 4838
Closing cash balance 9683
R.D.C.C. bank 30212
Abhyudaya co-op bank 23570

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INCOME & EXPENDITURE for the year ended 01-04-10 to 31-03-2011
INCOME Rs. EXPENDITURE Rs.
Member contribution 139800 Maintenance & repair 27431
Water, shed & color 76500 insurance 4838
Bank interest 2403 Pest control 2500
Sintex tank refund 4024 Water bill 30844
Electric bill 24590
Bonus 1250
Meeting 849
Bank charge 40
Shed work 73900
Salary 32200
Depreciation(dead stock) 2318
Surplus balance 5726

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BALANCE SHEET for the year ended 31-03-2011
LIABILITIES Rs. ASSETS Rs.
Paid up share capital 4500 Closing cash/bank balance 9683
Reserve and other fund R.D.C.C. bank 4420
Reserve fund 60770 Abhyudaya co-op bank 23570
Member contribution -- Investment & deposit
Fixed deposit 130000
Sinking fund F.D. 4000
Current liabilities & provisions -- Current assets, loans &
advances
--
Income & expenditure A/C Fixed assets
Surplus balance 140062.50 Dead stock
12864
(+)purchase in Yr.
1300
(+) surplus in Yr. 5726.00 145788
(-) depreciation 2318 9273

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AUDIT REPORT
(Maharashtra state co.operative act 1960 section no. 81(5-B) & rules 69)
I have examined the attached balance sheet as 31st
march 2010, 31st
march 2011 and the income
& expenditure account for financial year 01-04-09 to 31-03-2011 of the Hari leela co-op.
housing society Ltd., New Panvel (E) and report that:-
1. We have obtained all the information and explanation which the best of my knowledge
and belief were necessary for the purpose of our audit.
2. In our opinion, proper book of accounts as required under the M.C.S Act, rules and Bye
Laws of the society has been kept by the society.
3. In our opinion and the best of our information and according to the explanation given to
us.
a) the accounts subject to and read with the statement of general remarks there on stated
in PART-I and PART-II attached here with gives information required under the
Maharashtra Co-operative societies Act and present true and fair view of financial
transaction of the society.
b) the balance sheet and income and expenditure account are in agreement with the books
of account and the said balance sheet gives true and fair view of state of affairs of the
society as on 31st
march 2010 and 31st
march 2011 and the income and expenditure
accounts gives true and fair view of the surplus/deficit for the period ended on that dates.

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Comparative Balance Sheets as on 31st Dec 2010 & 31st Dec 2011
Particular 31-03-2010 31-03-2011 (Increase/
Decrease)
% Of (increase/
Decrease)
Liabilities
Paid up share capital 4250 4500 250 5.88
Reserve and other fund
Reserve fund 60770 60770 0 0
Member contribution -- -- - -
Current liabilities &
provisions
-- -- - -
Income & expenditure A/C 140062 145788 5726 4.08
TOTAL LIABILITIES 205082.50 211158 60755 29.62
ASSETS
Closing cash/bank balance 6021 9683 3662 60.82
R.D.C.C. bank 81583 4420 (77163) (94.58)
Abhyudaya co-op bank 22767.50 23570 802.5 3.52
RDCC bank (chief promoter) 4420 30212 25792 583.52
Investment & deposit
Fixed deposit 80000 130000 50000 62.5
Sinking fund F.D. - 4000 4000 100
Current assets, loans &
advances
-- -- - -
Fixed assets 10291 9273 (1018) (9.89)
TOTAL ASSETS 205082.50 211158 60755 29.62

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Comment-
Comparative Financial Statement analysis provides information to assess the direction of change
in the business. Financial statements are presented as on a particular date for a particular period.
The financial statement Balance Sheet indicates the financial position as at the end of an
accounting period and the financial statement Income Statement shows the operating and non-
operating results for a period. But financial managers and top management are also interested in
knowing whether the business is moving in a favorable or an unfavorable direction. For this
purpose, figures of current year have to be compared with those of the previous years. In
analyzing this way, comparative financial statements are prepared.
Comparative Financial Statement Analysis is also called as Horizontal analysis. The
Comparative Financial Statement provides information about two or more years' figures as well
as any increase or decrease from the previous year's figure and it's percentage of increase or
decrease. This kind of analysis helps in identifying the major improvements and weaknesses.
There is increase in total liability and a total asset as in 2010 it was 205082.50 but in 2011 it
increase by 29.62% i.e. 211158. We can see that there is increase in all asset and liability except
fixed asset in 2010 it was 10291 but It fall by 9.89% in 2011 i.e. 9273.

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I conclude based upon the data in my project I have learned what is cooperative housing society
and there are many advantages and disadvantages in cooperative housing society. Though the
main aim of these cooperative housing society is not to earn profit but still they are interested in
knowing whether their current income is more than the current expenses or not. They are also
keen in knowing the financial position of their concern. Co-operative Societies are not charitable
societies. They carry on Economic Activities. The profit is not the motive but the proper
accounts need to be maintained and presented before the members for their approval in the
Annual General Body meeting.
While doing this project I learn how to register the cooperative housing society, step involve
while registering a society. While studying the auditing report of two year 2010 and 2011 and
making project on a Hari leela cooperative housing society was also a knowledgeable experience
for me.

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