Club Accounts
From ZuluNotes - Free Leaving Cert Notes
Club Accounts
Clubs, societies and non-profit-making organisations are set up for the benefit of the members rather than for the purpose of making a profit. (This is why it is called Excess Income over Expenditure rather than profit). Thus, clubs require different accounts to trading firms.
Each club elects officers at its AGM. The officers generally run the club. The officers elected are:
1. The Chairperson
2. The Secretary
3. The PRO
4. The Treasurer
The Club Treasurer
The treasurer has overall responsibility for the club’s finances. Their tasks include:
• Ensuring that subscriptions and other funds are collected
• Maintaining proper records and producing receipts for monies received
• Producing a treasurer’s report and analysis at the AGM
• Drawing up the final accounts of the club and prepare the treasurer’s report
To facilitate the work of the treasurer, the following financial records will be kept:
• Analysed Receipts and Payments Book
• Analysed Cheque Payments Book
• Accounts for the main assets and liabilities of the club
Analysed Receipts and Payments Book
This is used to record the day-to-day receipts (money/cash) and payments (money/cash) of the organisation.
DR – all money coming in, CR – all money going out
Receipts and Payments A/C
This account is a summary of the organisation’s daily receipts and payments of cash for the period covered by the account. The total columns from the Analysed Receipts and Payments Book are entered in this account.
However, there are some disadvantages to this a/c:
- It does not show the true financial position as:
- Income and expenditure due is not accounted for
- Income and expenditure prepaid is included
- It does not distinguish between capital and revenue
Thus, an Income and Expenditure A/C is prepared for the Final A/Cs.
Final A/Cs of a Club
1. Accumulated Fund
This shows the capital on the 1/1. List the assets owned and liabilities. The difference between the assets and liabilities is called the accumulated fund.
Accumulated Fund of Club Y on 1/1/10
Assets xxx
Less Liabilities (xxx)
Accumulated Fund at 1/1/10 xxx
2. Special Purpose Profit and Loss A/C e.g. Bar Trading A/C
Shows the profit or loss made from a bar, restaurant or shop that the club runs. The end figure (profit/loss) is carried forward to the Income and Expenditure A/C.
Remember:
Sales = Receipts – Opening Debtors + Closing Debtors
Purchases = Payments to Creditors – Opening Creditors + Closing Creditors
Bar Trading A/C of Club Y for the year ended 31/12/10
Sales xxx
Less Cost of Sales
Opening Stock xxx
+ Purchases xx
xxx
Less Closing Stock (xx) (xx)
Gross Profit xxx
3. Income and Expenditure A/C
This contains all the revenue/current income and expenditure relevant to the year (i.e. equipment bought would be depreciated rather than the full amount being entered).
Remember:
With subs, you take the received amount and:
• Add prepaid at the beginning of the year (belong to this year)
• Minus dues at the beginning of the year (belongs to last year)
• Minus prepaid at the end of the year (belongs to next year)
• Add dues at the end of the year (belongs to this year)
Income and Expenditure A/C of Club Y for the year ended 31/12/10
Income
Subscriptions xxx
Subscriptions Due (xx) xxx
Bar Profit xxx
xxx
Expenditure
Depreciation xx
Rent xx (xx)
Excess Income over Expenditure xxx
Always put competition and raffle income + expenditure together to find profit/loss on the competition or raffle. If it is a profit, enter in income and if it is a loss, enter in expenditure.
3. Balance Sheet
Give assets and liabilities at end of the year in the usual layout. Don’t forget to include the balance from the Receipts and Payments A/C (Bank Balance – CA/CL).
Balance Sheet of Club Y for the year ended 31/12/10
Fixed Assets Cost Acc Dep NBV
Current Assets
Less Current Liabilities
Total Net Assets xxx
Financed By
Accumulated Fund
Add Excess Income over Expenditure
Total Capital Employed xxx
Theory Questions
How to fund capital expenditure:
• Use some of the Cash Balance
• Sell any investments/bonds
• Use a levy reserve fund
• Secure a bank loan
Reduction in Subscriptions:
• Generally, subs should not be reduced (despite a cash balance or excess income)
• Suggest using the subs to improve the club (thus, benefiting the members)
• Calculate what each member is paying per year, does it seem too much?
Financial Advice
• Check any losses – WHY?
• If there was a loan, see if selling their investments would have been more sensible.
• Do they need to continue their levy?
Exam Questions:
2008 Q3
2004 Q6
2002 Q7
