Question

Which principle restricts profit distribution on capital?

• A. Political neutrality
• B. Open membership
• C. Limited interest on capital
• D. Selling pure goods

Answer 1

Answer:

C. Limited interest on capital

The Limited Interest on Capital principle, introduced by the Rochdale Pioneers, restricts how much return members can earn on their invested capital. Its purpose is to ensure that: Profits are not the main goal of the cooperative Surplus is primarily used for member benefits, community development, or reinvestment This principle maintains the democratic and service-oriented nature of cooperatives, preventing domination by investors seeking maximum profit.