Difference between revisions of "Profit"
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'''Profit''' is described in Clause 35(b) as: [[Total Revenue]] less the cost of materials and services less depreciation less rents less interest. | '''Profit''' is described in Clause 35(b) as: [[Total Revenue]] less the cost of materials and services less depreciation less rents less interest. | ||
| − | Profit is not the same as [[Surplus]] as it excludes deductions for [[Pay]] and [[Associated Costs]]. | + | Profit is not the same as [[Surplus]] as it excludes deductions for [[Pay]] and [[Associated Costs]]. Because co-operative accounting principles apply, the [Member]s are regarded as owners, and do not deduct payments for 'wages' from the figure for profit. This is the gross profit because the distribution of any wages/advances on dividends agreed with members. |
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| + | This logic follows the one used in the Mondragon co-operatives who pay '''anticipos''' (anticipated profits) to members throughout the year. Whilst it feels like receiving a wage, it can vary with trading conditions and is only subject to employment law regarding employment contracts if the country does not recognise members as self-employed. | ||
Latest revision as of 12:15, 3 February 2021
Profit is described in Clause 35(b) as: Total Revenue less the cost of materials and services less depreciation less rents less interest.
Profit is not the same as Surplus as it excludes deductions for Pay and Associated Costs. Because co-operative accounting principles apply, the [Member]s are regarded as owners, and do not deduct payments for 'wages' from the figure for profit. This is the gross profit because the distribution of any wages/advances on dividends agreed with members.
This logic follows the one used in the Mondragon co-operatives who pay anticipos (anticipated profits) to members throughout the year. Whilst it feels like receiving a wage, it can vary with trading conditions and is only subject to employment law regarding employment contracts if the country does not recognise members as self-employed.
Return to the FairShares Glossary.
