CLUBS & SOCIETIES
Clubs and Societies exist for the benefit of their members. They do not aim to make a profit but they still prepare financial statement, however it has slightly different names.
- cash book = receipts and payments account
- income statement = income and expenditure account
- balance sheet = balance sheet
- profit = surplus
- loss = deficit
Receipts & Payments Account
- summary of all cash and banking transactions
- Non cash items are not shown in it
Subscriptions account
- calculating the correct amount of subscription income for a year is done using the Accruals Principle
Annual Subscriptions = 2310
-
Prepayment from members = 560
+
Failed subscriptions = 350
=2100
Annual Subscriptions = 1200
-
Prepayment from members = 120
+
Failed subscriptions = 240
=1280
Annual Subscriptions = 2870
-
Prepayment from members = 350
+
Failed subscriptions = 140
+
Prepayment for next year = 560
=3220
Balance sheet
- Similar to other types of business. However, the capital section is replaceed with "Accumulated fund"
The difference between "Receipts and Payments account" and " Income and Expenditure account"
- Receipts&Payment account is like a cashbook which record the monet coming in and out of the club but Income&Expenditure account is like a Profit and Loss account, it shows how the busniess is making surplus or deficit.
- Income&Expenditure account follows the accruals rule but Receipts&Payments doesn't.
Why the Surplus calculated in Income&Expenditure account does not equal in the Receipts&Payments account?
- Receipts and Payments account does not include non-cash expenses such as depreciation, which is include in Income and Expenditure account.
- Income and Expenditure account includes accruals and prepayments
Receipts and Payments account does not include.
