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Cambridge (CIE) IGCSE Your notes

Accounting
Financial Statements for Clubs & Societies
Contents
Accounts for Clubs & Societies
Subscriptions Account
Receipts & Payments Account
Income & Expenditure Account
Statement of Financial Position

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Accounts for Clubs & Societies

Your notes
Clubs & Societies
What types of businesses are clubs and societies?
Clubs and societies are classed as non-trading organisations
These types of businesses provide a service or facility for a fee called a subscription
They do not operate with the sole aim of making a profit

What financial statements are prepared for clubs and

societies?
Clubs and societies do not always keep a full set of accounting records
Their main accounting records tend to be
A receipts and payments account
This is a simple cash book
Trading sections of income statements for each one of any trading activities
Such as a café or a shop
These are prepared in the same way as for sole traders
An income and expenditure account
This shows the sources of income and expenses of the organisation
This is equivalent to the income statement for a sole trader
A subscription account
This calculates the fees that should have been received from members during the year
A statement of financial position
This is prepared in a similar way to that of sole traders

Income Statement for Clubs & Societies

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Why might clubs and societies prepare income statements?

Income statements are prepared when the club or society involves a trading activity which buys and Your notes
sells goods to raise extra money
A separate income statement is prepared for each trading activity
The profits or losses made from the trading activities are transferred to the income and expenditure
account

What is included in the income statements for trading

activities?
The income statement is prepared similarly to the trading section of the income statement of any
other business
The main differences are:
A gross profit is not calculated
The expenses related to the trading activity are included in the cost of sales

Layout of an income statement for a trading activity of a club or society

WORKED EXAMPLE

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Paramount Badminton Club owns badminton courts. It also operates a shop where it sells
refreshments and badminton equipment. Shop sales are on a cash basis and purchases made for
the shop are on credit. Your notes
The treasurer of the club provided the following information.

1 January 2023 31 December 2023

$ $

Subscriptions in advance 2 200 2 050

Subscriptions in arrears 6 515 6 850

Total shop trade payables 5 375 5 950

Shop inventory 3 600 3 200

Balance at bank 360 220

Other information provided for the year ended 31 December 2023:

Shop sales 48 120

Subscriptions received during the year 38 700

Shop purchases 36 200

Shop purchases returns 2 710

Shop wages 4 820

Wages for the club caretakers 2 650

Insurance for the club 3 640

Bank charges for the club 80

Telephone for the club 380

Advertising for the club 460

Depreciation of equipment for the club 520

Prepare the shop income statement for the year ended 31 December 2023.
Answer

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Only income and expenses related to the shop appear on the shop income statement. Do not
include anything that is for the club in general such as subscriptions.
Your notes
Include all the expenses in the cost of sales.

Paramount Badminton Club

Shop Income Statement for the year ended 31 December 2023

$ $

Shop sales 48 120

Less: Cost of sales

Opening Inventory 3 600

Purchases 36 200

39 800

Less: Purchases returns 2 710

37 090

Less: Closing inventory 3 200

Cost of goods sold 33 890

Shop wages 4 820 38 710

Shop profit 9 410

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Subscriptions Account
Your notes
Subscriptions Account
What is a subscriptions account?
A subscriptions account is prepared to show the amount of subscriptions that relates to the financial
year
This amount is then transferred to the income and expenditure account
Subscription is an income and is treated in the same way as income accounts of trading businesses
are treated

What is the layout of a subscriptions account?

The subscriptions account looks very similar to any other income account
The account may have two balances
A debit balance for subscriptions in arrears
This amount is still owed to the organisation
Therefore it is an asset
A credit balance for subscriptions paid in advance
This amount has been paid for future services which the organisation must provide
Therefore it is a liability
There might be irrecoverable debts that have been written off
The amount would be credited to the subscriptions account

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Your notes

Layout of a subscriptions account

EXAM TIP
Just remember that this is the same as an income account. This will reduce the amount you need to
remember.

WORKED EXAMPLE
The Batters is a baseball club. Members pay a monthly subscription of $10 per month to use the
facilities and equipment. The treasurer wants to know the amount to be transferred to the income

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and expenditure account for the year ended 31 December 2023. The following information was
provided:
Your notes
1 December 2022, nine members paid in advance for the month of January 2023
31 January 2023, six members paid the amount owing for month of December 2022
31 December 2023, eight members owe the month of December 2023
16 December 2023, two members paid in full for the year ending 31 December 2024
Received $3 730 in total from members for subscriptions during the year ended 31 December
2023
Prepare the subscription account for the year ended 31 December 2023. Bring down the balance on
1 January 2024.
Answer
Deal with each piece of information separately and identify which side to enter the amount.
1 December 2022, nine members paid in advance for January 2023
This is a prepayment from the previous year
This is the opening balance on the credit side
9 × $10 = $90
31 January 2023, six members paid the amount owing for December 2022
This is an accrual from the previous year
This is the opening balance on the debit side
6 × $10 = $60
31 December 2023, eight members owe the month of December 2023
This is an accrual for this year
This is the opening balance on the debit side for next year
Therefore the balance c/d is on the credit side
8 × $10 = $80
16 December 2023, two members paid in full for the year ending 31 December 2024
This is a prepayment for the next year
This is the opening balance on the credit side for next year
Therefore the balance c/d is on the debit side
2 × 12 × $10 = $240
Received $3 730 in total from members for subscriptions during the year ended 31 December
2023
This is the amount received

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Enter this on the right side

Calculate the amount to transfer to the income and expenditure account. You can find the balancing
figure for the account. Alternatively, you can calculate it from the information by adding amounts Your notes
which are due this year and subtracting amounts that are not due this year.
Start with the amount received for the year
Subtract the accrual from last year
Add the prepayment from last year
Add the accrual at the end of this year
Subtract the prepayment at the end of this year
$3 730 - $60 + $90 + $80 - $240 = $3 600
Enter the details into the account.

The Batters
Subscriptions Account

Date Details $ Date Details $

2023 2023
Balance b/d 60 Balance b/d 90
Jan 1 Jan 1

Dec 31 Income and expenditure 3 600 Dec 31 Bank 3 730

Dec 31 Balance c/d 240 Dec 31 Balance c/d 80

3 900 3 900

2024 2024
Balance b/d 80 Balance b/d 240
Jan 1 Jan 1

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Receipts & Payments Account

Your notes
Receipts & Payments Account
What is a receipts and payments account?
A receipts and payments account is a simple cash book
They are prepared each year by clubs and societies
Clubs and societies use the account to record receipts and payments
Amounts are not separated into cash or bank transactions
They are summarised as money in and money out

What is the layout of a receipts and payments account?

A receipts and payments account is prepared in a similar way to a cash book
Amounts received are debited
Amounts paid are credited
Receipts might include:
Subscriptions from members
Sales revenue from trading activities of the club
Such as selling refreshments
Payments might include:
Expenses for utilities
Purchase of inventory for the trading activities

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Your notes

Layout of a receipts and payments account

WORKED EXAMPLE
The Old Mill Golfing club offers lessons to amateur golfers and it also provides a place for
experienced golfers to play regularly. It also has a shop where golfing equipment can be bought.
The club had $4 120 in the bank on 1 June 2023. The club provided the following list of receipts and
payments for the year ended 31 May 2024.

Subscriptions received 66 400

Revenue for shop sales 8 350

Purchases of golfing equipment for resale 4 980

Wages 44 700

General expenses 5 100

Purchase of golf carts for the club 14 400

Income from the rental of golf carts 5 200

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Prepare the receipts and payments account for The Old Mill Golfing club for the year ended 31 May
2024. Balance the account and bring down the balance at 1 June 2024.
Your notes
Answer
The bank balance on 1 June 2023 is the opening balance and goes on the debit side.
Label each item as:
A debit if the club received money
A credit if the club paid money
$

Subscriptions received 66 400 Debit

Revenue for shop sales 8 350 Debit

Purchases of golfing equipment for resale 4 980 Credit

Wages 44 700 Credit

General expenses 5 100 Credit

Purchase of golf carts for the club 14 400 Credit

Income from the rental of golf carts 5 200 Debit

Enter the entries into the receipts and payments account. And then balance the account and bring
down the balance.

The Old Mill Golfing Club

Receipts and Payments Account for year ended 31 May 2024

Date Details $ Date Details $

2023 2024
June 1 Balance b/d 4 120 May 31 Shop purchases 4 980

2024 May 31 Wages 44 700

May 31 Subscriptions 66 400

May 31 Shop sales 8 350 May 31 General expenses 5 100

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May 31 Rental income 5 200 May 31 Golf carts purchase 14 400

May 31 Balance c/d 14 890 Your notes

84 070 84 070

2024
June 1 Balance b/d 14 890

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Income & Expenditure Account

Your notes
Income & Expenditure Account
What is an income and expenditure account?
An income and expenditure account is a statement that calculates the surplus or deficit
A surplus is comparable to a profit for a business
A deficit is comparable to a loss for a business
Clubs and societies do not operate to make a profit so the terms profit and loss are not used
The total expenses are subtracted from the income
If the income is greater than the expenses then there is a surplus
If the income is less than the expenses then there is a deficit
The income and expenditure account is similar to an income statement of a business
Only expenses and income are included
Assets and liabilities are not included
Adjustments are made for:
Depreciation of non-current assets
Accruals and prepayments of expenses and income

What are the differences between a receipts and payments

account and an income and expenditure account?
The differences are summarised in the total

Receipts and payments account Income and expenditure account

Includes only money that is received or paid Includes only income and expenses

Includes only transactions involving money Includes transactions involving non-monetary

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items such as depreciation

Your notes
Includes both capital and revenue receipts and Includes only revenue receipts and expenditure
expenditure

Does not include adjustments for accruals or Includes adjustments for accruals or
prepayments of expenses and income prepayments of expenses and income

The closing balance represents the bank balance or The final amount represents the surplus or deficit
amount of cash

What is the layout of an income and expenditure account?

The account is prepared in a similar way as the profit section of the income statement for other types
of businesses
Deal with any adjustments
Accruals
Subtract accruals from the previous year
Add accruals at the end of the current year
Prepayments
Add prepayments from the previous year
Subtract prepayments at the end of the current year
Calculate any depreciation charges
List the income first
If there are any associated costs with a source of income then these should be subtracted in this
section
For example, income from a competition should subtract the cost of the competition's prizes
Include any profits calculated on the income statements for any trading activities
List the expenditure next
Include any losses calculated on the income statements for any trading activities

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Do not include expenses related to specific trading activities

These will be included in the income statements for those activities and will contribute to the Your notes
profit or loss
Find the surplus or deficit of the year by subtracting the two totals

Layout of an income and expenditure account

WORKED EXAMPLE
Paramount Badminton Club owns several courts. It also operates a shop where it sells refreshments
and badminton equipment. Shop sales are on a cash basis and purchases made for the shop are on
credit.
The treasurer of the club provided the following information.

1 January 2023 31 December 2023

$ $

Subscriptions in advance 2 200 2 050

Subscriptions in arrears 6 515 6 850

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Other information provided for the year ended 31 December 2023:

Shop profit 9 410 Your notes

Subscriptions received during the year 38 700

Wages for caretakers 2 650

Insurance 3 640

Bank charges 80

Telephone 380

Advertising 460

Depreciation of equipment 520

Prepare the income and expenditure account for Paramount Badminton Club for the year ended 31
December 2023.
Answer
Calculate the subscription for the year by finding the amount that was due for the year.
Add the prepayments from the previous year
Subtract the accruals from the previous year
Add accruals at the end of the current year
Subtract prepayments at the end of the current year
$38 700 + $2 200 - $6 515 + $6 850 - $2 050 = $39 185
Identify the income:
Subscriptions
Shop profit
Identify the expenditure:
Wages
Insurance
Bank charges
Telephone
Advertising
Depreciation
Prepare the income and expenditure account using the required format.

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Paramount Badminton Club

Income and Expenditure Account for the year ended 31 December 2023 Your notes
$ $

Subscription 39 185

Shop profit 9 410

48 595

Wages for caretakers 2 650

Insurance 3 640

Bank charges 80

Telephone 380

Advertising 460

Depreciation of equipment 520 7 730

Surplus for the year 40 865

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Statement of Financial Position

Your notes
Statement of Financial Position for Clubs & Societies
What is the layout of the statement of financial position of a
club or society?
The statement of financial position for clubs and societies is prepared in a similar way to other types of
businesses
The statement is split into assets and liabilities
The main difference is the capital/equity section is replaced with an accumulated fund section

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Your notes

Layout of a statement of financial position for a club or society

What is an accumulated fund?

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The capital of a club or society is referred to as the accumulated fund

This is made up of Your notes
any capital which is invested into the organisation
the accumulation of surpluses of income over expenditure over time
At the end of each year
A surplus is added to the accumulated fund
A deficit is subtracted from the accumulated fund

How do I calculate the accumulated fund?

If the accumulated fund is not given in the question, you will need to calculate it by using the
accounting equation
Assets = Capital + Liabilities
Accumulated fund is the capital so the equation becomes:
Assets = Accumulated fund + Liabilities
Use the two known elements of assets and liabilities to find the accumulated fund
Accumulated fund = Assets - Liabilities

How do I use the accumulated fund to calculate surplus or

deficit?
To calculate the surplus or deficit for the year:
Calculate the accumulated fund at the start of the year
Calculate the accumulated fund at the end of the year
Calculate the change in the accumulated fund
If it has increased then this is the surplus
If it has decreased then this is the deficit

WORKED EXAMPLE

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The Chill, Chat and Knit Club offers knitting lessons to club members, as well as selling knitting
supplies. It had the following assets and liabilities at 1 January 2023:
Your notes
$

Club furniture and fittings 1 200

Inventory of knitting supplies 300

Amount owed to suppliers 120

Bank balance 820

At 31 December 2023 the assets and liabilities had the following balances:

Club furniture and fittings 1 080

Inventory of knitting supplies 180

Amount owed to suppliers 80

Bank balance 1 150

Calculate the surplus or deficit for The Chill, Chat and Knit Club for the year ended 31 December
2023.
Answer
Calculate the accumulated fund at the start of the year.

$ $

Assets

Club furniture and fittings 1 200

Inventory of knitting supplies 300

Bank balance 820 2 320

Less: Liabilities

Amount owed to suppliers 120

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Accumulated fund 2 200

Your notes
Calculate the accumulated fund at the end of the year.

$ $

Assets

Club furniture and fittings 1 080

Inventory of knitting supplies 180

Bank balance 1 150 2 410

Less: Liabilities

Amount owed to suppliers 80

Accumulated fund 2 330

The accumulated fund has increased so there has been a surplus. Find the difference between the
start and the end of the year.
$2 330 - $2 200 = $130
The surplus for the year was $130

WORKED EXAMPLE
The Locust Football Club is an amateur football club with members of all ages.
The following information was provided at 1 April 2023.

Equipment at cost 16 500

Provision for depreciation of equipment 3 300

Trade payables 2 100

Subscriptions prepaid 500

Accumulated fund ?

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The following information was provided at 31 March 2024.

$ Your notes
Trade payables 1 250

Subscriptions prepaid 1 130

Subscriptions owing 800

Bank balance 4 780

Additional notes:
The income and expenditure account for the year ended 31 March 2024 had a surplus of $3 160
No equipment was sold or purchased during the year
Depreciation is charged on equipment using the reducing balance method at 20% per annum
Prepare the statement of financial position of Locust Football Club at 31 March 2024.
Answer
Calculate the accumulated fund at the start of the year
Calculate the total assets
Net book value of equipment ($16 500 - $3 300) = $13 200
Calculate the total liabilities
Trade payables = $2 100
Subscriptions prepaid = $500
Total liabilities = £2 100 + $500 = $2 600
Calculate the difference
$13 200 - $2 600 = $10 600
Calculate the total depreciation to date
Find the year's depreciation using the net book value of the equipment
20% × $13 200 = $2 640
Find the total depreciation to date
$3 300 + $2 640 = $5 940
Find the current net book value of the equipment
$16 500 - $5 940 = $10 560
Identify whether the subscriptions owing and prepaid are assets or liabilities

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Subscriptions prepaid are current liabilities

Subscriptions owing are current assets
Prepare the statement using the required format. Your notes

The Locust Football Club

Statement of Financial Position at 31 March 2024

$ $ $

Non-current Assets Cost Provision for Depreciation Net Book Value

Equipment 16 500 5 940 10 560

Current assets

Other receivables 800

Bank balance 4 780 5 580

Total assets 16 140

Accumulated Fund

Opening balance 10 600

Add: Surplus for the year 3 160

13 760

Current Liabilities

Trade payables 1 250

Subscription prepaid 1 130 2 380

Total liabilities 16 140

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