Member equity is recorded on the cooperative's books in two different ways. Allocated equity is designated (or allocated) to individual member accounts in proportion to their use of the co-op. Unallocated equity is not assigned to each member's account, but is left in a general fund. Most co-ops use unallocated equity to build a capital base and to use as a cushion from operating losses.

The requirement that each member's business with the co-op be tracked and their allocated equity account be adjusted to reflect their activities place additional burdens on cooperative accounting. Thus, it is vital that the co-op obtain the services of qualified and experienced co-op accountants.

A sufficient level of capital is crucial to successful and long-term operation of any business.