Which of the following is NOT true about a cooperative?

• A. A cooperative is owned and controlled by its members.
• B. Profits in a cooperative are distributed based on members' participation.
• C. A cooperative aims to maximize profits for external shareholders.
• D. Members of a cooperative typically have voting rights in major decisions.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the definition of a cooperative. A cooperative is an organization owned and controlled by its members, who use its services or work there. It operates primarily to meet the needs of its members rather than to maximize profits for external shareholders.
2. Step 2: Analyze the statement 'A cooperative is owned and controlled by its members.' This is true because cooperatives are member-owned and democratic in control.
3. Step 3: Consider the statement 'Profits in a cooperative are distributed based on members' participation.' This is also true, as cooperatives typically distribute surplus earnings proportionally to members' use or participation, not based on capital investment.
4. Step 4: Evaluate the statement 'Members of a cooperative typically have voting rights in major decisions.' This is true since cooperatives follow the principle of one member, one vote, giving members control over major decisions.
5. Step 5: Identify the false statement: 'A cooperative aims to maximize profits for external shareholders.' This is NOT true because cooperatives prioritize member benefits and service rather than maximizing profits for outside investors.