Short Answer

The society calculates net profit for the year by deducting expenses from the total income. It matters as it impacts the financial health and decision-making of the society.

Detailed Explanation

Section 80 of the Gujarat Cooperative Societies Act, 1961 states, "The net profit for the year shall be ascertained by deducting all expenses, including depreciation, from the total income of the society during that year." This means that the society calculates its net profit by subtracting all expenses incurred, including depreciation, from the total income generated in that year.

In practice, this calculation is crucial for assessing the financial performance of the society. It helps in determining the surplus funds available for distribution among members or for investment in the society's development. The net profit figure also guides the management in making informed decisions regarding future projects, investments, or distributions.

Real-world Scenarios

• Scenario 1: A cooperative housing society in Gujarat calculates its net profit for the year by deducting maintenance expenses, repair costs, and administrative expenses from the total maintenance fees collected from members.

• Scenario 2: A cooperative credit society determines its net profit by subtracting interest expenses, operational costs, and loan loss provisions from the interest income earned during the year.

• Scenario 3: A cooperative agricultural society computes its net profit by deducting farming expenses, equipment costs, and marketing expenses from the total revenue generated from crop sales.

Reference

• Section 80 of the Gujarat Cooperative Societies Act, 1961: Official PDF