STANDARD CHART OF ACCOUNTS FOR MANUFACTURING OPERATIONS

MEMORANDUM CIRCULAR NO. __________ Series of 2007 T O

:

ALL CONCERNED

SUBJECT

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STANDARD CHART OF ACCOUNTS (SCA) FOR PRODUCERS COOPERATIVES AND OTHER COOPERATIVES WITH PRODUCTION/ MANUFACTURING OPERATION/ACTIVITIES

Pursuant to Section 3 of Republic Act No. 6939, an Act creating the Cooperative Development Authority defining its Powers, Functions and Responsibilities, the Authority hereby issues this Memorandum Circular prescribing the usage of Standard Chart of Accounts for Producers Cooperatives and Other Cooperatives with Production/Manufacturing Operation/Activities. I.

Scope This Circular shall be applied in accounting and financial reporting, both interim and year-end reports, of all producers cooperatives and other types of cooperatives with production/manufacturing operation/activities, duly registered/confirmed by the Cooperative Development Authority (CDA).

II.

Objectives and Purposes The basic purpose of prescribing the standard chart of accounts is to provide guidelines in the use of account and account titles in the preparation of financial statements for the use of producers cooperatives and other cooperatives with production/manufacturing operation. Specifically the standard chart of accounts shall: a)

ensure uniformity and common understanding of accounts;

b)

guide in the installation of accounting and internal control systems;

c)

facilitate the conduct of audit;

III.

d)

enhance transparency;

e)

sets standards and discipline in measuring the financial safety and soundness;

f)

facilitate the analysis and evaluation of financial management performance; and

g)

provide basis linkages.

in

monitoring,

supervision

and

business

Financial Statements A complete set of financial statements includes the following components: •

Statement of Financial Condition (Balance Sheet) shows assets, liabilities, and equity accounts of a business entity as of a given date. Assets and liabilities are further classified as current or non-current. Non-current assets include property, plant and equipment, intangible assets, investments and financial assets (excluding investments under the equity method, trade and other receivables and cash and cash equivalents); while non-current liabilities include long-term debt, long-term provisions and other liabilities that will be settled after the current operating cycle or will not require the use of current assets. Equity accounts for a cooperative include members’ share capital, donations and/or grants, and statutory funds.

•

Statement of Operations (Income Statement) presents revenues, costs and expenses, gains and losses and net surplus or net loss. The items presented are recognized in the books using accrual basis of accounting. Expenses are classified according to their function as part of cost of sales/services rendered, distribution or administrative activities. In a cooperative the difference between revenues and expenses is called net surplus that is allocated in accordance with the Cooperative Code or the cooperative’s by-laws.

•

Statement of Changes in Equity Accounts shows separately the changes in members’ equity, donations and grants and statutory funds. Transactions affecting these accounts include members’ capital build-up, refund of share capital due to membership withdrawal, acceptance of donations and grants in cash or in kind and subsequent utilization, allocation of net surplus to and utilization of statutory funds. 2

IV.

•

Cash Flow Statement provides information that enables users to evaluate the changes in net assets of an enterprise, its financial structure (including its liquidity and solvency) and its ability to affect the amounts and timing of cash flows in order to adapt to changing circumstances and opportunities. It provides information in assessing ability of the enterprise to generate and use cash and cash equivalents classified by operating, investing and financing activities.

•

Notes to Financial Statements include narrative descriptions or more detailed analyses of amounts shown on the face of the financial statements as well as additional information such as contingent liabilities and commitments to achieve fair presentation It also includes a section describing the accounting policies and the measurement basis /bases used in the preparation of the financial statements.

Standard Chart of Accounts for Producers Cooperatives and Other Cooperatives with Production/Manufacturing Operation/Activities ACCOUNT NAME

BRIEF DEFINITION/DESCRIPTION

STATEMENT OF FINANCIAL CONDITION

ASSETS

Economic Resources of Cooperatives that are recognized and measured in conformity with generally accepted accounting principles taking into consideration cooperative laws, principles and practices in the Philippines.

CURRENT ASSETS

Assets which are expected to be realized in, or are held for sale or consumption in, the normal course of the cooperative's operating cycle; or held primarily for trading purposes or for the short-term and expected to be realized within 12 months after the balance sheet date; or is cash or a cash equivalent asset which is not restricted to its use.

Cash on Hand

Money (bills and coins) still in the possession of the cooperative's custodian.

Checks & Other Cash Items (COCI)

Currently dated checks, postal money order (PMO) and demand drafts awaiting deposit.

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ACCOUNT NAME


Cash in Bank

Money deposited in the bank , i.e. savings,current, time deposits, and comboaccount which are unrestricted and readily available when needed. A subsidiary ledger shall be maintained for each bank account.

Cash in Other Cooperatives

Money deposited in the federations, i.e. savings and time deposits which are unrestricted and readily available when needed. A subsidiary ledger shall be maintained for each account.

Petty Cash Fund

Limited amount of money set aside for small expenditures such as stationaries, supplies and fares, maintained under an imprest system. The total amount of expenditures properly supported by documents plus the remaining cash balance should be equal to the amount of the fund. At the end of the accounting/reporting period, this account should reflect the fund originally set up.

Revolving Fund

The amount set aside to cover disbursements for recurring transactions. This may include emergency purchases, deposit withdrawals, etc. involving reasonable amount set by BOD. Transaction covered by this fund is subject to immediate liquidation in accordance with the cooperative policy.

Change Fund

Reasonable amount of money set aside to change bigger amount of bills to smaller denominations or coins.

SHORT TERM INVESTMENT

Investments in marketable securities, government bonds, and other mutual funds that are readily convertible into cash.

Investment at Fair Value through Profit or Loss

This refers to financial assets that upon initial recognition are designated by the coop as at fair value through profit or loss. This shall comprise of both debt and equity securities and shall be accounted for in the same manner as Held-to-Maturity (HTM) securities. The use of the fair value option shall be in accordance with the criteria set forth in the amendments to PAS 39 subject to the following conditions:

ACCOUNT NAME

BRIEF DEFINITION/DESCRIPTION 1. co-ops shall have in place appropriate risk management systems (including related risk management policies, procedures and controls) prior to initial application of the fair value option for a particular activity or purpose and on an ongoing basis; 2. co-ops shall apply the fair value option only to instruments for which fair values can be reliably estimated; and 3. co-ops shall provide CDA with supplemental information as may be necessary, to enable CDA to assess the impact of the co-op’s utilization of the fair value option.

Held-to-Maturity (HTM) Financial Assets

This refers to debt securities maturing within the year quoted in an active market with fixed or determinable payments and fixed maturity that SCC has the positive intention and ability to hold to maturity (or as defined under PAS 39).

Allowance for Probable Losses – HTM FA Available-for-Sale (AFS) Financial Assets

This refers to the amount of impairment loss that has been incurred on HTM securities. This refers to securities that are designated as available-for-sale, which shall be measured upon initial recognition at their fair value plus transaction costs that are directly attributable to the acquisition of securities. After initial recognition, a co-op shall measure AFS at their fair values, without any deduction for transaction costs it may incur on sale or other disposal. A gain or loss arising from a change in the fair value of an AFS security shall be recognized directly in equity under the account “Net Unrealized Gains/(Losses) on AFS Financial Assets” and reflected in the statement of changes in equity, except for impairment losses until the financial asset is derecognized, at which time the cumulative gain or loss previously recognized in equity shall be recognized in profit or loss. However, interest calculated using the effective interest method is recognized in profit or loss. Dividends on an AFS equity security are recognized in profit or loss when the financial institution’s right to receive payment is established 5

ACCOUNT NAME


Accumulated Gains/Losses - AFS

This refers to cumulative gains/losses arising from change in the fair value of AFS securities. The contra cumulative account is “net unrealized gains or losses on AFS Financial Asset”, which is a separate component of equity.

Unamortized Discount/Premium

The unamortized discount/premium on HTM debt securities, which shall be debited/credited monthly based on the effective interest method with the corresponding credit/debit to “Interest Income – HTM Debt Securities”

Allowance for Probable Losses AFS FA

The amount of impairment loss that has been incurred on AFS Securities. This is a temporary account to offset unrealized gains on investments – AFS.

Unquoted Debt Securities Classified Loans

It refers to Unquoted Debt Securities, with fixed or determinable payments and fixed maturity. Unquoted Debt Securities Classified as Loans shall be measured upon initial recognition at their fair value plus transaction costs that are directly attributable to the acquisition of the securities. After initial recognition, a co-op shall measure these securities at their amortized cost using the effective interest method. A gain or loss arising from the change in the fair value of Unquoted Debt Securities Classified as Loans shall be recognized in profit or loss when the security is derecognized or impaired, and through the amortization process.

Investment in NonMarketable Equity Securities (INMES)

It refers to equity instruments that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured. INMES shall be measured upon initial recognition at its fair value plus transaction costs that are directly attributable to the acquisition of the security. After initial recognition, the co-op shall measure INMES at cost. A gain or loss arising from the change in fair value of the INMES shall be recognized in profit or loss when the security is derecognized or impaired.

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ACCOUNT NAME


Allowance for Probable Losses INMES

Cumulative amount of impairment loss that has been incurred on INMES (same provisions as HTM). The co-op shall assess at each time it prepares its financial statements whether there is any objective evidence that an INMES is impaired.

Accounts Receivables Trade Current

The amount due from member and/or nonmember patrons resulting from sales of finished goods, merchandise and services which are expected to be collected within the credit terms set by the BOD not exceeding one year. Classified schedules and aging of accounts receivables should be prepared.

Accounts Receivables Trade Past Due

Total amount of Accounts Receivable Trade which remain unpaid beyond the credit terms set by the BOD.

Accounts Receivables Trade Restructured

Collectibles from member patrons restructured.

Accounts Receivables Trade in Litigation

Total principal amount from past due accounts under legal action. The receivables shall remain in this account during the pendency of the legal proceedings and until fully settled.

Allowance for Probable Losses on Accounts Receivable Trade

Allowance set aside in the books of the cooperative to provide for possible losses due to uncollectible accounts. This account may also be referred to as Allowance for Doubtful Accounts. This is a contra account to Accounts Receivable

Advances to Officers and Employees

Duly approved cash advances for official business to officers and employees, subject to liquidation in accordance with the policy of the cooperative.

Receivables from Accountable Officers and Employees

Total collectibles due from accountable officers and employees arising from shortages, losses and unliquidated cash advances beyond the prescribed period, that are subject to immediate settlement/ compromised agreement.

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the member & whose accounts

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ACCOUNT NAME Real and Other Properties Acquired (ROPA)

Allowance for Probable Losses ROPA Other Receivables Biological Asset Inventory- Animals

Biological Asset Inventory - Plants

BRIEF DEFINITION/DESCRIPTION This refers to real and other properties, acquired by the co-op in settlement of receivables through foreclosure or dation in payment and/or for other reasons. Should the cooperative use such assets in its main operation, the same assets shall be reclassified accordingly This shall be booked initially at the carrying amount of the receivables (i.e., outstanding loan balance adjusted for any unamortized premium or discount less allowance for probable losses computed based on PAS 39 provisioning requirements) plus booked accrued interest less allowance for probable losses plus transactions costs incurred upon acquisition (such as non-refundable capital gains tax and documentary stamp tax paid in connection with the foreclosure/purchase of the acquired real estate property): Provided, That where the booked amount of ROPA exceeds the appraised value of the acquired property, an allowance for probable losses equivalent to the excess of the amount booked over the appraised value shall be set up: Provided, further, That if the carrying amount of ROPA exceeds P5 million, the appraisal of the foreclosed/purchased asset shall be conducted by an independent appraiser acceptable to CDA. This refers to the cumulative amount of impairment loss incurred on ROPA, which shall be accounted for in accordance with PAS 36 Transactions not classified under any of the receivable accounts mentioned. Animals intended for sale which are valued at cost at the end of the accounting or reporting period. If there is a permanent decline in value, impairment loss shall be recognized. Subsidiary ledger is required for each type of animal. Plants intended for sale which are valued at cost at the end of the accounting or reporting period. If there is a permanent decline in value, impairment loss shall be recognized. Subsidiary ledger is required for each type of plant.

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ACCOUNT NAME


Agricultural Produce Inventory

Harvested product of the biological assets at fair value at the point of harvest

Raw Materials Inventory

Cost of raw materials owned at the end of the accounting or reporting period

Work in Process Inventory

Cost of goods still in process at the end of an accounting or reporting period

Finished Good Inventory

Cost of goods completed and available for sale at the end of an accounting or reporting period.

Allowance for the Decline in value of Inventory

Allowance set aside in the books of the cooperative to provide for impairment losses on inventory. This is a contra account to Inventories.

Unused Supplies

Office, store, agricultural and factory supplies on hand at the end of an accounting/reporting period. A subsidiary ledger is required for each supplies account.

Input Tax

Value-added tax due from or paid by a VAT registered cooperative on the importation or local purchases of merchandise/goods or services including lease or use of property. (in accordance with BIR RR 2005, No. 6, 7 & 8)

Advances to Suppliers

The amount given to suppliers as partial payments/ downpayments for goods and services to be acquired.

Prepaid Expenses

Payments made in advance in exchange for a future benefit usually within one year (e.g. insurance, interest, rentals)

NON CURRENT ASSETS

INVESTMENT

All other assets not classified as current to include tangible, intangible, operating and financial assets of a long term nature. Investments in financial instruments and properties as authorized by law.

Investment in Cooperative Federation

Investments in share capital of secondary / tertiary cooperatives where the cooperative is affiliated.

Investment Available for Sale

Investments in debt/equity Instruments (bonds and corporate share capital) that the cooperative intends to sell and are measured at cost

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ACCOUNT NAME


Investment Property

Cost of property (land or building or a portion thereof) held by the cooperative to generate income or capital appreciation or both, not used in production of goods, supply or services nor for administrative purposes or sale in the ordinary course of business measured at cost and subject to depreciation. These include assets acquired in settlement of loans/accounts. Fair value of property must be disclosed at the end of accounting/reporting period.

Accumulated Depreciation Investment Property

Total amount of depreciation on Investment Property (except land) that are set up periodically and charged against the current operations.

Held-to-Maturity (HTM) Long Term Financial Assets (LT FA)

This refers to debt securities, quoted in an active market with fixed or determinable payments and fixed maturity that SCC has the positive intention and ability to hold to maturity for more than one year (or as defined under PAS 39).

Unamortized Discount/Premium

Allowance for Probable Losses – HTM-LT FA

This refers to the unamortized discount/premium on HTM debt securities, which shall be debited/credited monthly based on the effective interest method with the corresponding credit/debit to “Interest Income – HTM Debt Securities” This refers to the cumulative amount of impairment loss that has been incurred on HTM LT – FA securities.

Unquoted Debt Securities Classified Loans

This refers to unquoted debt securities, with fixed or determinable payments and fixed maturity.

Investment in NonMarketable Equity Securities (INMES)

This refers to equity instruments that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured. This includes investments in cooperative federations/unions and cooperative banks.

ACCOUNT NAME


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Allowance for Probable Losses – INMES

This refers to the cumulative amount of impairment loss that has been incurred on INMES (same as provisions as HTM).

Investment in Subsidiaries/ Associates and Joint Ventures

This refers to the amount of SCC’s investment in the equity instruments of unconsolidated subsidiaries/associates, OR joint ventures. Accounted for in accordance with PAS 27 for Investment in Subsidiaries, PAS 28 for Investment in Associates and PAS 31 for Investment in JVs.

PROPERTY, PLANT AND EQUIPMENT

Include all tangible assets with an estimated useful life beyond one year are used in the conduct of the business, and not intended for sale in the ordinary course of business. Recorded at cost or fair value if donated.

Land

The acquisition cost of the land used for its main operation plus all incidental costs such as title, taxes, surveying fees, legal fees, restoration cost, and other costs. All these are reflected in a single cost (fair value or appraised value if donated). Taxes paid by the cooperatives as a contribution to the cost of public improvements (special assessment) are treated as part of the cost of the land. At the end of the accounting/ reporting period, fair value of the property must be disclosed.

Land Improvements

The cost of depreciable improvements after land acquisition (i.e. fencing, water system, drainage system, sidewalks, pavements, and other improvements) that are subject to depreciation over their useful lives.

Accumulated Depreciation - Land Improvements

Total amount of depreciation on land improvement that are set up periodically and charged against the current operations.

Building and Improvements

Acquisition/Construction cost of the building and its improvements on the land owned by the cooperative and used for its main operation. Major repairs or improvements that will prolong the life of the building are considered capitalizable cost. At the end of the accounting/ reporting period, fair value of the property must be disclosed. Total amount of depreciation on building based on cost that are set up periodically and charged against the current operations.

Accumulated DepreciationBuilding and Improvements ACCOUNT NAME


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Building on Leased/Usufruct Land

The cost of construction of new building on a leased/usufruct land and shall be depreciated over the estimated life of the building or the lease/usufruct term whichever is shorter.

Accumulated Depreciation – Building on Leased/ Usufruct Land Construction in Progress

Total amount of depreciation on building on Leased/Usufruct Land based on cost that are set-up periodically and charged against the current operations. Cost of materials, labor and other construction related cost incurred on unfinished construction project, prior to occupancy/actual use. Subsidiary ledger shall be maintained for each project. This account shall be set up upon occupancy of the building even if construction is still in progress. Depreciation shall apply to the cost allocated to the occupied area/s. If unoccupied by the end of the fifth year, depreciation shall be booked, beginning on the sixth year, for a period not exceeding 5 years.

Accumulated Depreciation Construction in Progress

THIS ACCOUNT IS SUGGESTED TO BE DELETED! Furniture, Fixtures & Equipment

The cost of movable (furniture), immovable (fixtures) properties and office/production/ store equipment used in the cooperative's ordinary course of business such as but not limited to desks, chairs, cabinets, computers including incidental expenses incurred in acquiring them, up to the time they are received and ready for use.

Accumulated Depreciation Furniture, Fixture & Equipment Transportation and Delivery Equipment

Total amount of depreciation on Furniture, Fixture and Office Equipment that are set up periodically and charged against the current operations Cost of transportation and delivery equipment which are owned by the cooperative such as pick ups, vans, motorcycles, and other vehicles used in transporting goods, services and personnel.

Accumulated DepreciationTransportation and Delivery Equipment

Total amount of depreciation on Transportation and Delivery Equipment that are set up periodically and charged against the current operations.

Farm Equipment

Cost of farm equipment which are owned by the cooperative such as tractors, threshers, dryers, and other farm equipment used in producing agricultural/farm products.

ACCOUNT NAME


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Accumulated Depreciation - Farm Equipment

Total amount of depreciation on farm equipment that are set-up periodically and charged against the current operations.

Nursery/ Greenhouses

Cost of nursery and greenhouse facilities and equipment used for seedling production and growing of vegetables.

Accumulated Depreciation Nursery/Greenhouse

Total amount of depreciation on nursery and greenhouse that are set-up periodically and charged against the current operations.

Laboratory Equipment

Cost of laboratory equipment used for testing and analysis of inputs, production process and outputs.

Accumulated Depreciation Laboratory Equipment

Total amount of depreciation on laboratory equipment that are set-up periodically and charged against the current operations.

Machineries Equipment

Cost of machineries equipment owned by the cooperative and used in producing goods and providing services.

Accumulated Depreciation Machineries Equipment

Total amount of depreciation on machineries equipment that are set-up periodically and charged against the current operations

Tools and Repair Equipment

Cost of hand tools and repair equipment owned by the cooperative and used to repair equipment and other machines

Accumulated Depreciation - Tools & Repair Equipment

Total amount of depreciation on tools and repair equipment that are set-up periodically and charged against the current operations

BIOLOGICAL ASSETS

Animals and plants used in the conduct of business and not intended for sale. (subsidiary ledger should be maintained for each account)

Biological AssetsAnimals

Cost of animals acquired or produced, used in the conduct of business and not intended for sale. Subsidiary ledger is maintained for each kind of animal.

Accumulated Depreciation – Biological Assets Animals

Total amount of depreciation on Biological Assets - Animals that are set-up periodically and charged against the current operations

ACCOUNT NAME


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Biological AssetsPlants

Cost of plants that produces seeds, seedlings, flowers or fruits, whether acquired or produced and used in the conduct of business and not intended for sale. Subsidiary ledger is maintained for each kind of plant.

Accumulated Depreciation – Biological Assets Plants

Total amount of depreciation on Biological Assets - plants that are set-up periodically and charged against the current operations

INTANGIBLE ASSETS

An identifiable non-monetary asset without physical substance, controlled by the cooperatives for which future economic benefits are expected to flow back and amortized over the estimated useful life or legal life whichever is shorter.

Franchise

For Franchisor -The cost of developing and registering the trade mark /brand /logo for a particular product or services for the exclusive use and benefit of the coop. For the Franchisee - the cost of acquiring the right and privilege to sell goods and services using the particular trademark/ brand /logo of the franchisor.

Patent

The cost of acquiring the exclusive rights granted by the state to a patentee (the inventor or assignee) for a fixed period in exchange for the regulated, public disclosure of certain details of a device, method, process or composition of matter which is new, inventive, and useful or industrially applicable

Copyright

The cost of acquiring the right for the exclusive use or distribution of products or services acquired from an author or artists.

OTHER NON-CURRENT ASSETS

Assets which do not fit into any of the preceding classifications

Allowance for Probable Losses ROPA

This refers to the cumulative amount of impairment loss incurred on ROPA, which shall be accounted for in accordance with PAS 36.

Cooperative Development Cost

Cost incurred prior to the actual operations of the cooperative such as promoting and organizing, subject to amortization for a period not exceeding 3 years. Among others, these costs are:

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ACCOUNT NAME

Cooperative Computerization Cost

BRIEF DEFINITION/DESCRIPTION a. Professional fees in connection with the organization; b. Registration fees; c. Conduct of PMES prior to registration; and d. Other cost of services rendered to the cooperative. The cost of acquisition or development of computer programs and other software excluding upgrading of system. This is amortized over a period not exceeding three (3) years or useful life whichever is shorter. (Subsidiary Ledger for development cost and for computer softwares shall be maintained).

Product/Business Development Cost

Cost of enhancement/improvements of existing products/business and/or development of new products/ prototypes/samples for production after establishing the technical and commercial feasibility, subject to D132amortization and impairment.

Other Funds and Deposits

The fund set aside for funding of reserves (statutory and other reserves) established by the coop such as Retirement, Mutual Benefit and other Funds. This may be in the form of time deposit or other securities which are readily convertible to cash when needed.

Due from HO/ Branch/ Subsidiary

The amounts used to record receivables from Head Office/Branch/Subsidiary.

Leasehold Rights and Improvements/ Concession Rights

The cost of improvements on leased land or premises (i.e. renovations of office building, repainting, pavement and fencing) including cost of rights and concession rights which are subject to amortization over the useful life of the leased land or premises or the term of the leased whichever is shorter.

Miscellaneous Assets

Assets not falling in any of the above categories.

LIABILITIES

Economic Obligations of a cooperative that are recognized and measured in conformity with generally accepted accounting principles taking into consideration cooperatives' laws, principles and practices in the Philippines.

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ACCOUNT NAME CURRENT LIABILITIES

BRIEF DEFINITION/DESCRIPTION Obligation is classified as current if: a) it is reasonably expected to be settled within the normal operating cycle of the cooperative; b) it is due within 12 months after balance sheet date; c) it is held primarily for the purpose of being traded; or d) the coop. does not have an unconditional right to defer settlement of the liability for at least 12 months after balance sheet date.

Savings Deposits

Deposits made by members that can be withdrawn anytime at the option of the depositors

Time Deposits

Deposits made by members in the cooperative over a specified period of time and withdrawable at a predetermined date.

Accounts PayableTrade

Amount of obligations/ indebtedness to suppliers for purchase of materials/ supplies for production and other goods intended for sale

Output Tax

Value added tax due on the sale of taxable merchandise/goods or services by any VAT registered entity (in accordance with BIR RR 2005-6, 7 & 8)

VAT Payable

Excess of output tax over input tax

Accrued Expenses

Expenses that have been incurred but not yet paid as of the end of accounting period. (e.g. unpaid salaries, utilities, taxes, fees and other charges)

Accounts PayableOthers

Amount of obligations/ indebtedness to suppliers for purchase of other items not intended for sale (e.g. supplies, periodicals and other obligations)

Loans Payable Current

The indebtedness of the cooperative to financial institutions, other cooperatives or person(s) which is payable within the accounting/fiscal period and the current portion of the Long Term Loans Payable.

SSS/ECC/ Philhealth Premium/Pag-Ibig Contributions Payable

Amounts withheld by the cooperative from the compensation/ income of its employees representing their premium contributions to SSS, Philhealth and Pag-ibig agencies. As an employer, the cooperative has its corresponding share of contributions and this should be set up every payroll period.

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ACCOUNT NAME


SSS/Pag-Ibig Loans Payable

Amounts withheld by the cooperative from the compensation/ income of its employees representing their payment of loans to SSS and Pag-ibig agencies.

Withholding Tax Payable

All taxes withheld as prescribed by law including but not limited to the unremitted withholding tax deducted from the employees' salaries representing part of their possible income tax liability to the Bureau of Internal Revenue (BIR) at the end of the accounting/reporting period.

Interest on Share Capital Payable

Liability of the cooperative to its members for interest on share capital, which can be determined only at the end of every accounting period.

Patronage Refund Payable

Liability of the cooperative representing excess payments of members' patronage of goods purchased/services received from the cooperative. This can be determined only at the end of every accounting period.

Due to Apex (CETF)

An amount set aside for the education and training fund of an apex organization, which is 50% of the amount allocated, by the cooperative in accordance with the provision of the cooperative's by-laws and the cooperative code. The apex organization may be either a federation or union of which the cooperative is a member.

Advances from Customers

Amount received as deposits by customers for delivery of goods or services.

Other Payables

Other liabilities that cannot be classified under any of the preceding current liability accounts.

NON-CURRENT LIABILITIES Loans Payable-Long Term Discount on Loans/Bonds Payable Revolving Capital Payable

All liabilities not classified as current. The indebtedness of the cooperatives to financial institutions, other cooperatives or person(s) net of current portion and payable beyond one year. The difference between the gross amount and the present value of the long term loan. The deferred payment of interest on share capital and patronage refund as agreed upon by the General Assembly.

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ACCOUNT NAME


Retirement Fund Payable

Accumulated retirement benefit costs charged against the operation of the cooperative over the expected remaining working lives of participating employees.

Other Long Term Payables

Other Long Term liabilities not elsewhere classified.

OTHER NON-CURRENT LIABILITIES

The totality of all other liabilities that cannot be classified under any of the preceding liability accounts.

Project Subsidy Fund Payable

Unused portion of the donation/grant for training, salaries and wages, etc.

Deposit for Share Capital Subscription

Amount paid by the members for future subscription of additional share capital when the authorized capital has been fully subscribed and paid pending approval for the proposed amendment of the Cooperative Articles of Cooperation.

Mutual Benefit and Other Funds Payable

Funds for special purposes such as member's welfare and benefits, i.e. loan protection, hospitalization, death, scholarship assistance, and, etc. including KBGF/CGF, provisions for accidents not taken from net surplus.

Due to HO/Branch/ Subsidiary

The account is used to record payables to HO/Branch/ Subsidiary.

EQUITY MEMBERS' EQUITY

Excess of a cooperative's assets over its liabilities. Ownership interest of members in the cooperative.

Authorized Share Capital - Common

The amount of capitalization of a cooperative in common share as prescribed in the articles of cooperation.

Unissued Share Capital - Common

Portion of the authorized share capital common of a cooperative as prescribed in the articles of cooperation which is not yet subscribed and issued.

Subscribed Share Capital- Common

The amount of common share capital subscribed by regular members payable over a certain period of time. The total unpaid subscribed common share capital of regular members.

Subscription Receivable Common Share Capital Common

The account used to record collection of common share capital.

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ACCOUNT NAME


Treasury Shares Capital -Common

Common shares previously issued and reacquired by the cooperative but not retired or cancelled, and maybe reissued to existing members. This account should only be used in the event that there are no members who are willing to buy the shares of outgoing members.

Authorized Share Capital - Preferred

The amount of capitalization of a co-op in a preferred share as prescribed by the articles of cooperation. Portion of the authorized share capital preferred of a cooperative as prescribed by the articles of cooperation which are not yet subscribed and issued. The amount of preferred share capital subscribed by member (regular and associate) payable over a certain period of time.

Unissued Share Capital - Preferred Subscribed Share Capital-Preferred

Subscriptions Receivable-Preferred

The total unpaid subscribed preferred share capital of regular and associate members.

Share CapitalPreferred

Account used to record collection of preferred share capital.

Treasury Shares Capital -Preferred

Preferred shares previously issued and reacquired by the cooperative but not retired or cancelled, and maybe reissued to existing members. This account should only be used in the event that there are no members who are willing to buy the shares of outgoing members.

Undivided Net Surplus

The accumulated net surplus of the cooperative that should be allocated and distributed at the end of each accounting period in accordance with Articles 86 and 87 of RA 6938. Used for Interim Financial Statement Presentation only.

Net Loss

Temporary account to record losses in operations incurred during the accounting period. Net loss for the year shall shall be charged against reserve fund, subject to provisions of Article 81 of RA 6938.

UNREALIZED GAINS/ LOSSES DONATIONS/GRANTS

The cumulative gains (losses) arising from change in the fair value of AFS securities. Amounts received by the cooperative as awards, subsidies, grants, aids, and others. This shall not be available for distribution to members.

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ACCOUNT NAME STATUTORY FUNDS

BRIEF DEFINITION/DESCRIPTION Mandatory funds established/set up in accordance with Articles 86 and 87 of the Cooperative Code.

Reserve Fund

Amounts set aside annually for the stability of the cooperative and to meet net losses in its operations (equivalent to at least 10% of net surplus). A corresponding fund should be set up either in the form of time deposit with local banks or government securities. Only the amount in excess of the paid up share capital may be used for the expansion and authorized investment of the cooperative as provided for in its by-laws.

Cooperative Education & Training Fund

The amount retained by the cooperative out of the mandatory allocation as stipulated in the cooperative's by-laws.

Optional Fund

Fund set aside from the net surplus (should not exceed 10%) for future use such as land and building, community developments, and other. STATEMENT OF OPERATIONS

REVENUE ITEMS

Gross Increases in assets or gross decreases in liabilities recognized and measured in conformity with generally accepted accounting principles that result from those types of earning activities of a cooperative that can change equity.

NET SALES

Total sales less sales returns, allowances and discounts.

Sales

Invoice price of all goods sold whether in cash or on account.

Sales Returns and Allowances

Deductions from the invoice price due to returns resulting from damage, defects or errors in the kind or quality of goods delivered/sold to customers/members.

Sales Discounts

Deductions allowed to customers as volume discounts or incentives for prompt settlement of their accounts.

COST OF GOODS SOLD Cost of Goods Sold

Financial Statement caption which is defined as cost/value of commodity sold. Account used to record cost of finished goods sold under perpetual inventory system.

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ACCOUNT NAME


Raw Material Purchases

Gross cost of goods bought whether in cash or on account. (used for periodic inventory system).

Purchases Returns and Allowances

Deductions from invoice cost due to damage, defects, or errors in the kind or quality of goods bought.

Purchase Discounts

Reductions in the cost of goods bought due to the early payment of creditors' accounts.

Freight in

Cost of transporting the goods from the place where the same are actually purchased to the place of production. This should form part of the Cost of Good Sold.

Direct Labor

Cost of labor directly attributed to the production of goods.

Factory Overhead

All costs other than direct materials and direct labor used in the production/ manufacturing/ process of goods including royalties and production garments.

Inventory Loss

Reduction in inventory due to spoilage and breakage under the perpetual inventory system.

OTHER INCOME

Income received by the cooperatives other than its main operation.

Membership Fee

Amount collected from the cooperative's members-applicants upon approval of their membership in the cooperative.

Income / Interest from Investment / Deposits

Income earned by the cooperatives from deposits in banks/other institutions and investments made in financial institutions/government/business organizations. This shall include interest income derived from the deposit of statutory funds in the bank until utilized. Interest on these funds shall not be used to increase the statutory fund.

Fines, Penalties and other Surcharges

Fees imposed by the cooperative for delayed payments of accounts which are recorded when earned and collected.

Miscellaneous Income

All other income earned by the cooperative for which no specific account has been set up.

21

ACCOUNT NAME


EXPENSES

Gross decreases in assets or gross increases in liabilities recognized and measured in conformity with generally accepted accounting principles that result from those types of earning-directed activities of a cooperative that can change member's equity.

A. FINANCING COST

Expenses related to borrowings of funds used for operations.

B.

Interest Expense on Deposits

Interest incurred on savings and time deposits of both regular and associate members.

Interest Expense on Borrowings

Interest incurred on borrowings.

Other Charges on Borrowings

Service charges, filing fees and other fees for borrowings incurred by the cooperative.

MARKETING COST

Cost incurred in the promotion and distribution of products and services.

Salaries & Wages

Amount incurred for services rendered by employees in selling/ trading operations including overtime pay

Employees' Benefits

Benefits given to employees other than salaries and wages such as but not limited to 13th month pay, bonus, allowances, subsistence allowances including human resource development.

Insurance

Expenses incurred to insure the assets/properties of the cooperative, premium of insurance for officers and employees and bonds of accountable officers and employees.

SSS, Philhealth, ECC, Pag-Ibig Contribution

The cooperative's share in the employees' contribution to SSS, ECC, Philhealth and Pag-ibig.

Retirement Benefit

The cost of providing retirement benefits to employees for their services rendered. The cost of retirement benefits is recognized as an expense in the periods during which the services are rendered.

Officers' Honorarium and Allowances

Amount incurred for services rendered by directors, committee members and officers involved in marketing activities.

22

ACCOUNT NAME


Supplies

Expenses incurred for various supplies used for selling/marketing activities.

Professional Fees

Storage/Warehousing

Fees and related expenses incurred for professional services rendered for marketing and promotion of cooperative products and services. Expenses incurred for temporary housing of the products.

Power, Light and Water

Cost of electricity and water incurred in business operations.

Travel and Transportation

Amount incurred for fares, toll fees, board and lodging, per diem, and meal allowance of officers, employees and members while on official travel.

Repairs and Maintenance

Expenses incurred in the repair and maintenance of each facility and equipment except major repairs that prolong the life of the asset.

Rentals

Expenses incurred for the building/office spaces or facilities leased by the cooperative

Taxes and Licenses

Expenses incurred for taxes and fees due to government entities, both national and local.

Communication

Amount incurred for transmission of messages such as courier, telephone, email, fax, internet, messengerial, and all other means of communication.

Representation

Expenses incurred related to accommodating visitors and guests on official business.

Advertising and promotion

Expenses incurred for advertising and promotion of cooperatives or products to be sold.

Commission

The amount of commission paid to sales agent.

Delivery

Cost of transporting the goods from cooperative's warehouse/store to the buyer using any hired form of transportation.

Gas, Oil and Lubricants

Amounts incurred for gasoline, fuel and lubricants of service vehicles/delivery vans of the cooperative.

Repacking and Labeling

Expenses incurred for repacking and labeling of items prior to its resale or delivery.

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ACCOUNT NAME


Product Research

Expenses incurred in the enhancement of existing products.

Depreciation

Amount provided for wear and tear of property, plant and equipment.

Amortization

Amount provided for amortization of intangible assets.

Impairment Loss

Difference between the carrying value and the recoverable value of the assets.

Miscellaneous Expenses

All other expenses incurred by the cooperative not classified under any of the specified expenses account.

C. ADMINISTRATIVE COSTS

Pertaining to expenses incurred in the conduct of business activities.

Salaries & Wages

Amount incurred for services rendered by employees including overtime pay.

Employees Benefits

Benefits given to employees other than salaries and wages such as but not limited to 13th month pay, bonus, allowances, subsistence allowances include human resource development.

Officers' Honorarium and Allowances

Amount incurred for services rendered by directors, committee members and officers.

SSS, Philhealth, ECC, Pag-Ibig Contribution

The cooperative's share in the employees' contribution to SSS, ECC, Philhealth and Pag-ibig.

Retirement Benefit Expenses

The cost of providing retirement benefits to employees for their services rendered. The cost of retirement benefits is recognized as an expense in the periods during which the services are rendered.

Power, Light and Water

Cost of electricity and water incurred in business operations.

Travel and Transportation

Amount incurred for fares, toll fees, board and lodging, per diem and meal allowance of officers and employees and members while on official travel.

Insurance

Expenses incurred to insure the assets/properties of the cooperative, premium of insurance for officers and employees and bonds of accountable officers and employees.

24

ACCOUNT NAME


Repairs and Maintenance

Expenses incurred in the repair and maintenance of each facility and equipment except major repairs that prolong the life of the asset.

Rentals

Expenses incurred for building/office spaces or facilities leased by the cooperative.

Taxes and Licenses

Expenses incurred for taxes, fees and charges due to government entities, both national and local.

Communication

Amount incurred for courier (letters), telephone, cellphone, e-mail, fax, internet, messengerial, and all other means of communication.

Representation

Expenses incurred related to accommodating visitors and guests on official business. Amount incurred for officers, directors, employees and members, for attending trainings and seminars including all expenses related thereto after exhausting the CETF (local). For purposes of analysis, amount incurred may be classified as to the recipient.

Trainings and Seminars

Meetings and Conferences

Amount incurred for officers, directors, employees and members, for attending meetings and conferences.

Gas, Oil & Lubricants

Amounts incurred for gasoline, fuel and lubricants for cooperative's vehicles and for day to day operation

Supplies

Expenses incurred for office and various supplies used for operation.

Litigation expense

Expenses incurred in judicial and quasijudicial cases including incidental costs where the coop is the complainant or respondent as authorized by the BODs.

Professional Fees

Fees and related expenses incurred for professional services rendered.

Periodicals, Magazines & Subscription

Amount incurred for subscription or purchase of periodicals, magazines.

25

ACCOUNT NAME


General Support Services

Expenses incurred for employing the services of security, janitors, messengers and other support services.

Bank Charges

Bank fees and other charges excluding cost of checkbooks.

Provision for probable losses on accounts receivables Depreciation

Allocation or provision for estimated losses arising from probable uncollectible accounts.

Amortization

allocation of cost over the estimated life of intangible assets

Impairment Loss

Difference between the carrying value and the recoverable value of the assets

Miscellaneous Expenses

All other expenses incurred by the cooperative not classified under any of the specified expenses account.

D. DEMOCRATIC GOVERNANCE COST (SOCIAL COST)

Allocation of cost over the estimated life of property and equipment.

Expenses incurred in providing for additional members' benefits and social services

General Assembly Meeting

Expenses incurred in the conduct of regular/special general assembly.

Members Benefit

All expenses incurred for the benefit of the members (e.g. medical insurance and group life insurance)

Affiliation Fee

Amount incurred to cover membership or registration fees and annual dues to a federation or union.

Social & Community Service

Expenses incurred by the cooperatives in its social community involvement including solicitations and donations to charitable institutions.

Provision for CGF (KBGF)

Amount set up for the provisions of CGF (KBGF)

Provision for Members' Future Benefits

Amount set up for future benefit of members not taken from Net Surplus (e.g. mortuary, memorial services)

OTHER ITEMS - SUBSIDY / GAIN (LOSSES)

Special transactions arising from the operations of the cooperatives.

26

ACCOUNT NAME


Project Subsidy

An amount deducted from Project subsidy fund to subsidize project expenses. This shall appear in the statement of operation as a contra account to subsidized project expenses. An amount deducted from Donation and Grant to subsidize depreciation funded by donation and grant. An amount deducted from Optional Fund to subsidize depreciation funded by Optional Fund and or community development expense. Portion of the Project Subsidy Fund expended for training, salaries and wages and other activities subsidized by donations and grants. Gain or loss derived from the sale of acquired assets/properties and equipment.

Donation and Grant Subsidy Optional Fund Subsidy Subsidized Project Expenses Gains or Loss on Sale of Property & Equipment Gains or Loss in Investment Gains or Losses from Foreign Exchange Valuation Prior Years Adjustment

V.

VI.

Income earned or loss incurred from the disposal or permanent decline of value of investment. Gains or losses arising from retirement or conversion of foreign currency exchange rate fluctuation per actual transaction. Adjustments on transactions affecting income and expenses incurred in the previous year(s) which are taken up on the current year.

Pro-forma Financial Reports with supporting schedules • Statement of Financial Condition (Balance Sheet)_Annex A • Statement of Operations (Income Statement)_Annex B • Statement of Changes in Members’ Equity, Donations and Grants and Statutory Funds_Annex C • Statement of Cash Flows_Annex D • Notes to Financial Statements_Annex E Sanctions Producers Cooperatives and Other Types of Cooperatives with production/manufacturing operation/activities which fail to comply with this Circular shall be subject to the following sanctions: • •

First non-compliance, the Authority shall issue warning to concerned cooperatives; Second non-compliance, Certificate of Good Standing (CGS) shall not be issued by the Authority; 27

•

Third non-compliance, the Certificate of Registration of cooperative shall be cancelled after compliance with due process of law.

VII. Transitory Provision All Producers Cooperatives and Other Types of Cooperatives with Production/Manufacturing Operation/Activities shall within one (1) year from the effectivity of this Circular make necessary adjustment on their existing systems in order to comply with the Standard Chart of Accounts. Provided, however, that the aforecited sanctions under item VI shall not be imposed during the transition period. VIII. Repeals All circulars, regulations, issuances or parts thereof, inconsistent with any of the provisions of this Circular are hereby repealed or modified accordingly. IX. Effectivity This Circular shall be published in the Office of the National Administration Registry (ONAR) and shall take effect fifteen (15) days after its publication. LECIRA V. JUAREZ Chairperson Approved per BOA Resolution No. 259, Series of 2007 Dated September 22, 2007

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SCHEDULE 2 SCHEDULE OF OPERATING EXPENSES:

ACCOUNTS

Current Year

Prior Years

XXX XXX XXX XXX

XXX XXX XXX XXX

XXX XXX XXX

XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX

XXX XXX

Officers' Honorarium and Allowances SSS, Philhealth, ECC, Pag-ibig Contribution

XXX XXX

XXX XXX

Retirement Benefit Expense Power, Light and Water Travel and Transportation Insurance Repairs and Maintenance Rentals Taxes and Licenses Communications Representation Trainings and Seminars

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

A. FINANCING COSTS Interest Expense on Borrowings Interest Expense on Deposit Other Financing Charges Total Financing Cost B. MARKETING COSTS Salaries and Wages Employees Benefits Insurance SSS, Philhealth, ECC, Pag-ibig Contribution Retirement Benefit Expense Officers' Honorarium and Allowances Supplies Professional Fees Storate/Warehousing Power, Light and Water Travel and Transportation Repairs and Maintenance Rentals Taxes and Licenses Communication Representation Advertising and Promotion Commission Deliviery Gas, Oil and Lubricants Repacking and Labeling Product Research Depreciation Amortization Impairment Loss Miscellaneous Expense Total Marketing Cost C. ADMINISTRATIVE COST Salaries and Wages Employees Benefits

ACCOUNTS

Current Year

Prior Years

XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX

XXX XXX

XXX XXX

Miscellaneous Expense Total Administrative Expenses

XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX

DEMOCRATIC/GOVERNANCE COSTS General Assembly Expenses Members' Benefit Expense Affiliation Fee Social and Community Service Expense Provision for CGF (KBGF) Provision for Fortuitous Events and Accidents Provision for Members' Future Benefits Total Democratic Governance Cost

XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX XXX XXX

Meetings and Conferences Gas, Oil and Lubricants Supplies Litigation Expenses Professional Fees Periodical, Magazines and Subscription General Support Services Bank Charges Provision for Probable Loss on Accounts Receivable Depreciation Amortization Impairment Loss

D.

AGRICULTURE LIVESTOCK & POULTRY

CROPS

ACCOUNT TITLE INVENTORY ACCOUNT Feeds & Supplement Eggs Fresh Dairy Products (unprocessed) Stock animals (piglets, fattener, one-day

Inventory Account Biological Assets Inventory Cost of fatteners /carcass (follow procedure for non-agri) raw materials (feeds, medicines) Direct Labor Factory overhead ( includes depreciation, indirect labor) Cash

Seeds (for planting, for sale) Fertilizers and Pesticides Seedlings/saplings (baby trees, cuttings and tissue cultured seedlings, sibuals) Fruits

cost of piglets feeds/medicines

Direct Labor Overhead Salaries - farmworkers depreciation Prof Fees - vet med/ depletion agriculturists/botanist amortization supplies utilities Property, Plant & Equipment Biological Assets Animals Plants/Trees

contract growers Inventory - dispersal (subsidiary) Inventory - in house (subsidiary) Sales - Contract Growing Cost of Sales - Contract Growing Gross Profit Less share of contract grower Adjusted Gross Margin - Contract Grower

eye buds

full grown mother

Investment Property (includes stages of biological assets awaiting productivity period)

Banana capitalize before planting land prep

new seedling

stack

flowers

capitalize

capitalize

after harvest all cost are operational

planting sappling

fertilizer insectiside

harvest

18 mon. maintenance period

palm tree 5 yrs - 25 yrs - productive Purchase of Pigs Biological Assets-Animals Cash Purchase of Feeds Biological Assets-Animals Cash Recording the piglets Agricultural Produce Accumulated Depreciation- Biological Assets - Animals

STANDARD CHART OF ACCOUNTS FOR MANUFACTURING OPERATIONS

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