C LUB /S ERVICE / I NCOMPLETE

C LUB A CCOUNTS A club is not a business. Its ‘raison d'être’ is not profit. It does not pay CPT on its profits. Different set of words used to ‘flag’ this difference. Cash Book  Receipts & Payments a/c P & L  Income & Expenditure a/c Profit  Excess of Income Capital  Accumulated Fund

C LUB A CCOUNTS – TRY THIS APPROACH ? o Get a set of accounts from some local club o Simple Rec & Pay a/c. Rule – no thought over whether something should have been paid or not o If it was paid it goes into Payments. If it was received it goes with Receipts Point out: ‘a bad year’ but – purchase Equip Competition profit Sponsorship o A Receipts & Payments a/c does not give clear picture of club finances.

Same Question – utilising Income & Expenditure a/c Note: A ‘loss’ is now a profit! More and clearer information for members. Talk about sponsorship, depreciation, subs due/prepaid, expenses due/prepaid

Now move on to a simple I & E

Next we Introduce the Bar Trading Account Bar Stock – same as all Trading Accounts Bar Debtors and Creditors : two methods 1. Control A/c [ Ord. Level must use this in Incomplete] 2. Sales = Receipts + what we haven't received yet Purchases = Payment + due Next we tackle Accumulated Fund. You can do this as a list of assets and liabilities [ layout not important] Now we can tackle a full 100 mark Ordinary Level Question. Example Q ‘Pearse’s Football Club’

Next we move on to Higher level 60 marks [2008 Q3 ] And then onto Higher level 100 [Q6 2011] Things to watch out for : Life Membership is liability and is written off into Income. Levy Reserve Fund is a liability. If a loan is repaid during the year( ie it’s in R&P) – then it was start of year  a liability. Repayment of loan €30000 on 31/9/10 with 15 months interest. € €3960 is 15 months interest broken:- €2376 [ 9 months-this year] Expense in I&E €1584 [ 6 months – last year ] liability in Accum. Fund Income from 4% Investments €1500 (in R&P) and Inv. Int Due 31/12/2010 €500  Inv. Int €2000 as income in I&E but also Investments €50000 in Assets in Accum Fund. Levy of €100 on 8 members for 2008 included in subs rec.  Levy due (Asset) in Accum. Fund.

S ERVICE F IRMS Very similar to Club Account Important Differences; [ eg Q ] 1. Asked to calculate beginning of year. This is added to Net Profit at end of Profit&Loss [not in BS] 2. ‘All Fixed Assets have 3 years accumulated depreciation on 1/1/09’. These are subtracted from Assets in calculation of Reserves. 3. Clients’ fees Amount received €340,000 + Fees due 31/12/2009 €500 + Advance deposits 1/1/2009 €4,000 Less fees prepaid 31/12/2009 €5,000 = 339,500 = Income 4. The R/D cheque must be added to clients fees due and subtracted again to show Bad Debt.

I NCOMPLETE R ECORDS Three types: 1. Control Accounts [ Q ] 2. Net Worth [ Q not asked for P&L] 3. Ratios Control Account – Top-Down o Find the Opening Capital [ or Goodwill] by doing a list of Assets & Liabilities at start of year. o Do Notes/Workings as follows:- Find Cash Sales – Do a Cash a/c [ NB Cash Drawings] Find Credit Sales- Do Debtors Control a/c Find Credit Purchases – Do Creditors Control a/c [ NB Stock Drawings ] Find Closing Bank figure – Do Bank a/c Find Drawings figure – make a list of Drawings For each expense – Adjust for due/prepaid - Adjust for Drawings o Prepare Trading, Profit and loss & Balance Sheet.

I NCOMPLETE R ECORDS Net Worth/Mark up-margin/Bottom-Up Find the Opening Capital [ or Goodwill] by doing a list of Assets and Liabilities at start of year. Do Notes/Workings as follows:- Find Drawings figure – make a list of Drawings For each expense – Adjust for due/prepaid – Adjust for Drawings Complete the end-of-year Balance Sheet. [The’ Financed by’ section will contain the missing figure for Net Profit] [Capital Employed – Long Term Liability – Capital – Capital Introduced + Drawings = Profit] Prepare a Trading, Profit & Loss a/c in as much detail as possible [the figures for Gross Profit, Purchases & Sales are the last to go in] [Margin is profit as a % of sales; Mark-up is profit as a % of Cost of sales]

I NCOMPLETE R ECORDS Watch out for: 1. Dividends (lodged). The business has not got any Investments  the dividends are paid to the owner in his/her private capacity  ‘Capital Introduced’ – Add to Capital in closing Balance Sheet. 2. Investment Fund Interest €36 – add to Gross Profit and include in Investment Fund In Balance Sheet. 3. Borrowed €120, Paid back in 20 equal instalments... The first instalment due on 1/2/2009. In Balance sheet as at 31/12/08 Loan Instalment due €12000 in Current Liabilities and in ‘Financed by’ Long Term Loan € College fees attributed to an employee  expense in P&L:....attributed to a child  drawings

I NCOMPLETE R ECORDS Ratio Type Q – ‘not examined in ages’. end of Ratios.

T HEORY Answer the question that is asked! The answer is in the question. Incomplete has had the same theory question for years! Club & Service: Always quantify your comments. Do not mix assets with liabilities in one sentence If asked to give advice – give financial advice