Final Accounts of Clubs and Societies Introduction. Receipts and payments account Calculation of the result of extra activities of a club or society Subscription Account Income and expenditure account Accumulated fund Statement of financial position of a club or society

1. Accounting for non-profit making organizations
Sanjaya Jayasundara
B.Sc.(Finance) Sp.
University of Sri Jayewardenepura, ICASL Finalist,
CCM, RIA, International School Teacher
071 25 45 001

2. Chapter 24 : Accounting for non-profit making
organizations
1) Introduction
2) Receipts and Payments account
3) Income and Expenditure account
4) Profit or loss for a special purpose
5) Accumulated fund
6) Drawing up income and expenditure accounts
7) Subscriptions
8) Donations
9) Entrance fees
10)Life membership
11)Treasurer’s responsibilities
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3. Introduction
This chapter concentrates on the accounts of non-trading organizations such
as clubs and societies. The main aim of these organizations is to provide some
facilities and services for their members: making a profit is not the main
objective.
The main source of income of a society is subscriptions. These are the
amounts members pay usually annually, to use the facilities provided by the
society.
A person is appointed to act as treasurer and be responsible for collecting any
money due to the society and for paying money owed by the society. At the
end of the financial year the treasurer will usually present final accounts to
the members. These final accounts may consist of a receipt and payments
account, possibly a trading account, an income and expenditure account and
balance sheet.
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4. Receipts and payments account
This is regarded as a summary of the cash book for the financial year. All
money received is debited and all money paid is credited. The account is
balanced and the balance carried down to become the opening balance for
the following financial year.
Chathura Sports Club,
Receipts and Payments Account for the year ended 31st December 2012
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Receipts £ Payments £
Bank balance 01 January 2012 200 Rent of sports facilities 1500
Subscriptions received for 2012 2500 Equipment 300
Donations 150 Committee expenses 200
Sweepstake profit 195 Postage, stationery etc. 50
Bank balance 31 December 2012 995
3045 3045

5. Income and expenditure account
An account for an non-profit making organization to find the surplus or deficit made
during a period.
It compares the gains of the club with the expenses of running the club.
* Income > Expenses - Surplus of income over expenditure
* Income < Expenses - Excess of expenditure over income (Deficit)
An income and expenditure account is prepared using the same principles as those applied
in the preparation of a profit and loss account of a trading business.
It is important to remember that:
* adjustments must be made for accruals and prepayments.
* capital receipts and capital expenditure are not included.
* only revenue receipts and revenue expenditures are included.
* non-monetary items such as depreciation are included.
* assets and liabilities at the beginning and end of the financial year are not
included.
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6. Profit or loss for a special purpose.
Although buying and selling is not the main purpose of a club or society, many
do carry out a trading activity. Many clubs operate a shop or a café where
goods are bought and sold. At the end of the financial period trading account
should be prepared for each separate trading activity to show the profit
earned on that activity.
• The trading account of a club or society is prepared in exactly the same way
as that for a business.
• In a club or society the profit/loss on a trading activity is calculated in the
trading activity account and then transferred to the income and expenditure
account.
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7. Accumulated fund
A form of capital account for non-profit making organizations.
A sole trader, partnership and companies would have capital accounts. A
non –profit making organization would instead have an accumulated fund. It
is in effect the same as a capital account since it is the difference between
assets and liabilities.
In a business;
In a non-profit making organization;
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Capital = Assets - Liabilities
Accumulated Fund = Assets - Liabilities

8. Drawing up income and expenditure accounts
Income and Expenditure Account for the year ended 31 December 2012
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£ £
Income
Gross profit from …………… Examples: Bar, café, etc ××××
Subscriptions ××××
Donations received ×××
×××××
Less : Expenditures
Staff wages ×××
Rates and insurance ×××
Telephone and postage ××
Depreciations ×××
General expenses, etc……… ×××
(××××)
Surplus of income over expenditure ××××

9. Subscriptions
The receipts and payments account shows the amount of subscriptions received during the
financial year.
but
The income and expenditure account shows the amount of subscriptions relating to the financial
year.
Subscriptions account regarded as the account of the members in the books of the organization.
Dr. Subscriptions Account Cr.
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£ £
1 Jan. 2012 Owing b/d ×× 1 Jan. 2012 Prepaid b/d ××
31 Dec. Income & Expenditure
Account
×××× 31 Dec. Bank/Receipt &
Payments Account
××××
31 Dec. 2012 Prepaid c/d ×× 31 Dec. 2012 Owing c/d ××
×××× ××××
1 Jan. 2013 Owing b/d ×× Prepaid b/d ××

10. Donations
A monetary gift donated to the club or society.
Small donations received are usually shown as income in the year that they
are received.
If, however, the donation is a considerable sum, for example a legacy of say,
£10 000 from a deceased member, then it would be added to the
accumulated fund shown in the balance sheet.
Entrance fees : New members often have to pay an entrance fee in the year
that they join, in addition to the membership fee for that year. Entrance fees
are normally included as income in the year that they are received.
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11. Life membership
Where members pay one amount for membership to last them their lifetime.
In this case, all of the money received from life membership should not be
credited to the income and expenditure account of the year in which it is
received.
If Age < 60 ( 100% / (60 – age)) * life membership fee = credited to Income
and Expenditure Account.
Balance would be appear in the Balance Sheet as a long-
term liability.
If Age =>60  10% * life membership fee = credited to Income and
Expenditure Account.
Balance would be appear in the Balance Sheet as a long-
term liability.
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12. I wish you an enjoyable learning…..!
Sanjaya Jayasundara
“The best investment is education.”