2001 Ohio State Cooperative Education Test

Name:

True/False

Indicate whether the sentence or statement is true or false.

The board of directors is responsible for discharging all employees.

Capitalization is the amount and source of money needed to start and operate the cooperative.

A federated cooperative consists of other cooperatives as their members.

Combining the volume of several members leverages their position when dealing with other businesses.

A general business corporation operates as a profit-making enterprise for its investors.

Instead of stock, some cooperatives issue certificates of equity.

The nation’s oldest and largest financial cooperatives is the Farm Credit System.

A quorum is the maximum percentage of members required to be present to conduct official business.

A member-patron is defined as any person marketing, purchasing, or obtaining a service through a cooperative.

10.

Uniform pricing among members is a cooperative principle and a legal requirement.

11.

Cooperative equity comes from the outside investors.

12.

Mixed cooperatives have both regional and international cooperatives as members.

13.

A system of direct investment called transferable delivery rights, provides members a long-term home for their production and provides and opportunity to share in the benefit of value-added processing based on their patronage.

14.

Selecting the manager is one of the most critical tasks for the board of directors.

15.

Long-term decisions are the responsibility of the manager, short-term decision are the responsibility of the board.

16.

It is possible for a cooperative member who bought nothing during the year to be able to vote, while a patron who purchased through the year would not be able to vote.

17.

Cooperatives use bank loans in the same way as other businesses.

18.

Centralized cooperatives have individuals and business entities as members.

19.

Broad primary control activities usually concern the board, while secondary controls pertaining to short-run operations are the responsibility of management.

20.

The National Cooperative Bank was developed by agricultural cooperatives.

21.

Communication and education of members is not an integral activity of the management team.

22.

Common stock may be divided into classes.

23.

Partnerships consist of two or more people who jointly own, control and operate a business.

24.

Directors are legally responsible for the performance and conduct of the cooperative.

25.

Reducing the cooperative’s operating costs increases the amount of earnings available for distribution to members to boost their income.

Multiple Choice

Identify the letter of the choice that best completes the statement or answers the question.

26.

In an agricultural cooperative, the benefits normally go to:

a.	patrons in proportion to use
b.	only to member-investors in proportion to their investment
c.	all stockholders according to their investment
d.	the manager and employees according to their hours

27.

A cooperative which integrates vertically;

a.	performs more functions or services to the same product as it moves from farmer to consumer
b.	adds branch facilities to perform the same types of services
c.	both performs more functions or services to the same product as it moves from farmer to consumer and adds branch facilities to perform the same types of services
d.	none of these are correct

28.

Which of the following is NOT a benefit that cooperatives have provided farmers?

a.	cooperatives have prevented agricultural surpluses by member production
b.	cooperatives have improved member incomes by distributing net savings from supply and marketing operations as patronage refunds
c.	cooperatives have served as training grounds for many local agricultural leaders
d.	cooperatives have served members by providing services that were otherwise unavailable and by improving existing services

29.

A distinctive difference between cooperative and other business types is:

a.	how earnings are distributed	c.	the number of owners
b.	the size of the business	d.	the types of products sold

30.

Keeping the financial records of the cooperative is the responsibility of the:

a.	manager	d.	treasurer
b.	board president	e.	board of directors
c.	secretary

31.

The manager of a cooperative is accountable to:

a.	bankers and other lenders to the cooperative
b.	the board of directors
c.	the members of the cooperative
d.	the president of the board

32.

Cooperative employees should:

a.	understand the purpose and objectives of the cooperatives
b.	fully perform duties
c.	understand the relationship to member-owners
d.	favorably represent the cooperative
e.	all of these are correct

33.

A cooperative manager:

a.	runs the day-today business of the cooperatives
b.	answers to the board of directors
c.	hires all employees
d.	answers to the board of directors and hires all employees
e.	runs the day-today business of the cooperatives, answers to the board of directors and hires all employees

34.

The first believed cooperative in the United States was:

a.	a seed and feed cooperative	c.	a mutual fire insurance company
b.	a dairy marketing cooperative	d.	a grocery store

35.

The largest single segment of the cooperative industry is:

a.	credit unions	d.	food cooperatives
b.	rural electric cooperatives	e.	telephone cooperatives
c.	grain marketing cooperatives

36.

A cooperative is owned by its:

a.	members	c.	lenders
b.	investors	d.	none of these are correct

37.

Cooperative association memberships may be classified as:

a.	centralized, locals or mixed	c.	federated, mixed or international
b.	centralized, federated or mixed	d.	domestic, international or mixed

38.

“NICE” refers to:

a.	an organization which finances many consumer cooperatives
b.	an educational institute sponsored each year by the National Council of Farmer Cooperatives
c.	a cooperatives oriented political action committee

39.

Cooperative marketing:

a.	increases risk to the individual producer
b.	reduces risk to the individual producer
c.	does not affect risk to the individual producer

40.

What is the first step in forming a cooperative?

a.	discuss with small groups of producers the perceived economic need that formation of a cooperative might fulfill
b.	hold an exploratory producer meeting
c.	conduct an investigation to determine the feasibility of a cooperative
d.	conduct a market, supply or cost analysis
e.	conduct a financial analysis and develop a business plan

41.

When a cooperative patron receives a non-qualified patronage refund allocation, the patron is required to:

a.	include the allocation in his/her taxable income
b.	only include the non-qualified allocation in taxable income when it is redeemed
c.	never required to report

42.

Approving individual applications for credit is the responsibility of the:

a.	manager	c.	directors	e.	local FICA bank board
b.	treasurer	d.	auditors

43.

There are three basic categories of private business firms:

a.	individually owned
b.	partnerships
c.	cooperatives
d.	corporations
e.	individually owned, partnerships, and corporations

44.

Margins placed into unallocated reserves are taxed:

a.	once, cooperative paying corporate tax
b.	twice, both cooperative and patron are taxed
c.	not at all
d.	none of these are correct

45.

Cooperatives may be financed by:

a.	a direct contribution through a membership fee or purchase of stock
b.	an agreement to withhold a portion of net earnings
c.	assessments based on units of product sold or purchased
d.	all of these are correct

46.

The Rochdale Equitable Pioneers’ Society was a:

a.	chapter of the Grange Society
b.	an urban membership club
c.	a rural social group

47.

Cooperative principles:

a.	have evolved over time in terms of definition and acceptance
b.	are accepted universally by all cooperatives
c.	dictated by federal statute

48.

All of the following are considered National cooperative organizations, except:

a.	National Milk Producers Federation
b.	National Rural Electric Cooperatives Association
c.	National Cattlemen’s Association
d.	Volunteers in Overseas Cooperatives Assistance

49.

The first formal cooperative in United States was organized by:

a.	Edwin G. Nourse	c.	Benjamin Franklin
b.	Harold Greene	d.	Aaron Sapiro

50.

A marketing agreement is:

a.	a written contract between the cooperative and a member
b.	a contract with an advertising agency
c.	an oral agreement between members and outside buyers

51.

Who establishes the patronage refund level for a cooperative?

a.	manager	c.	membership at annual meeting
b.	cooperative treasurer	d.	board of directors

52.

If two base capital plans are the same except that one plan uses 5 years’ patronage history and the other uses 7 years:

a.	the plan using 7 years’ history will provide more equity
b.	the plan using 5 years’ history will require a higher average investment per member
c.	the shorter patronage history will allow faster adjustments of equity investments to use
d.	the longer patronage history will require new members to invest over a shorter period

53.

Which is NOT a decision to be made by the members of a cooperative?

a.	change in bylaws	c.	retirement of allocated equity
b.	liquidation of major business lines

54.

Cooperative earnings from business with members is taxed once:

a.	as income of the cooperative when earned
b.	as income of the member when allocated to them
c.	as income of the cooperative when earned and as income of the member when allocated to them

55.

A cooperative is:

a.	a business owned and controlled by the people who use its services
b.	is operated for the mutual benefit of the member
c.	is a business owned and managed by the board of directors
d.	a business owned and controlled by the people who use its services and is operated for the mutual benefit of the member
e.	is operated for the mutual benefit of the member and is a business owned and managed by the board of directors

56.

A Rochdale principle is:

a.	one-member, one vote
b.	cooperative education
c.	maximum profit
d.	cooperative education and maximum profit
e.	one-member, one vote and cooperative education

57.

Cooperatives can work with other cooperatives through:

a.	federated cooperatives	d.	informal networks
b.	joint ventures	e.	all of these are correct
c.	marketing agencies in common

58.

The primary/founding legislation of farmer cooperative is known as:

a.	Agricultural Marketing Act of 1926	c.	Rural Electrification Act
b.	Capper-Volstead Act	d.	Smith-Lever Act

59.

An individual has less individual business risk when he or she belongs to a cooperative, because the:

a.	cooperative speculates in the futures market for him or her
b.	risk is divided among all the members
c.	cooperative guarantees all prices
d.	cooperative assumes all the risk for members

60.

Marketing agreements:

a.	allow growers to maintain maximum flexibility in decision making
b.	transfer some decision making from individual growers to the cooperative
c.	transfer some decision making from the cooperatives to individual growers

61.

Cooperative members can supply equity capital to their cooperative:

a.	through direct cash investment
b.	by agreeing to having per-unit capital retains deducted from the products they market through a cooperative
c.	by having part of the patronage refund retains invested in the cooperative
d.	all of these are correct
e.	none of these are correct

62.

Cooperative member education is important because:

a.	cooperatives are a different type of business
b.	important for attracting, recruiting and retaining new members
c.	so members are informed voters
d.	important for attracting, recruiting and retaining new members and so members are informed voters
e.	all of these are correct

63.

Responsibilities of the board of directors include all of the below EXCEPT:

a.	set policies
b.	modify by-laws
c.	employ and evaluate hourly employees
d.	preserve the cooperative character of the organization

64.

Farmers buying a processing plant for their products would be an example of:

a.	horizontal integration	c.	both horizontal and vertical integration
b.	vertical integration	d.	none of these are correct

65.

Which of the following has NOT been a major influence in the development of agricultural cooperatives in the U.S.?

a.	economic conditions	c.	farmer organization leadership
b.	political party in power	d.	public policy