Clubs & Societies Done by: Koh Ngin Lan Edna.

Clubs & Societies Done by: Koh Ngin Lan Edna

Preparation of Final Accounts
Recap: What have we learnt ? Sole Proprietorship Trading & Profit & Loss Account Balance Sheet Partnership (see sole proprietorship) Profit & Loss & Appropriation A/c Interest on drawings Interest on capital Salary Share of profits Balance Sheet Capital A/c Current A/c

What do they have in common?
They are business organisations: involved in trading activities, ie. the buying & selling of goods or services operate solely to make a profit for their owners

Non-Trading Organisations
Topic for Today … … Non-Trading Organisations Clubs & Societies

Lesson Objectives At the end of the lesson, you should be able to:
state the difference between a trading and non-trading organisation distinguish between the different accounts kept by a trading and non-trading organisation

Non-Trading Organisations
What are they? Clubs, societies and associations formed to cater and promote the sporting, cultural and recreational interests of its members. They are not formed with the purpose of making profits.

Clubs & Societies School

Clubs & Societies School Guitar Club Mathematics Society Swimming Club
social, music Swimming Club social, maths puzzles sports, outdoor activities What are the sources of income & expenses?

Clubs & Societies What are some of the non-trading organisations in Singapore? Purpose of existence? Sources of income? Expenses incurred?

Non-Profit Organisations:
In Singapore … … Non-Profit Organisations: CDAC, Mendaki, Sinda Purpose: To provide tuition schemes at affordable rates To assist low-income, low-skilled workers to upgrade their skills To enhance the well-being of the community Income: Donations, grants from the Govt. Expenses: Day-to-day activities, scholarships, training programmes

In Singapore … … National Kidney Foundation (NKF) Purpose: Income:
To provide kidney patients with dialysis treatment & drugs at affordable cost. Income: Donations only Expenses: Day-to-day activities, dialysis machines, research.

In Singapore … … Recreational Activities: Chinese Swimming Club
Purpose: To provide facilities & activities that cater to the sports, recreation & social needs of the family & individual Income: Entrance fees, subscriptions fees, restaurant & karaoke operations, fruit machines & video games Expenses: Day-to-day activities, eg. repairs & maintenance, utilities

Clubs & Societies Trading Concern Non-Trading
Compare the income of a trading & non-trading organisation: Trading Concern Sale of goods Receipts from services Rent received Commission received Discount received Interest received Bad debts recovered Profits from the sale of fixed assets Non-Trading Subscriptions Entrance fees Profit from sale of refreshments Interest received Donations Fun fair Life membership subscriptions Grants from the Govt.

Clubs & Societies Receipts Expenditure Capital Revenue Capital Revenue
Do you remember? Receipts Expenditure Capital Revenue Capital Revenue

Clubs & Societies Revenue Receipts Trading Concern Clubs & Societies
Sale of goods Other income: Cash discount received for prompt payment Commission revenue Rent revenue Interest on deposit Clubs & Societies Membership subscriptions Donations Proceeds from social activities Receipts from sale of refreshments in bar/restaurant Rental fees for courts, lockers

Clubs & Societies Revenue Expenditure Trading Concern
Cost of goods sold Administrative expenses, staff wages, stationery, utilities, rental Distributive expenses: Transport, commission, bad debts Depreciation of fixed assets Clubs & Societies Entertainment expenses Competition prizes Repairs & maintenance Sundry expenses: Utilities, staff wages Honorarium Depreciation of fixed assets Bar/ Restaurant expenses

Clubs & Societies Capital Receipts Trading Concern Clubs & Societies
Bank loans Owner’s contribution Clubs & Societies Legacies Entrance fees (if capitalised) Life membership fees

Clubs & Societies Capital Expenditure Trading Concerns
Purchase of fixed assets Clubs & Societies Purchase of fixed assets: Office equipment Sports equipment Furniture, billiard tables Extension of club houses, including legal fees

Clubs & Societies Similar to trading concerns, clubs & societies need to keep accounts according to accounting concepts & principles Financial statements are presented to members during the Annual General Meeting (AGM) Also submitted to the Registrar of Societies How are the accounts of clubs & societies different from trading concerns?

Clubs & Societies Recall that … Difference … Trading Concern
Trading Account Gross Profit = Net Sales – Cost of Sales Clubs & Societies Bar Trading A/c Trading profit = Trading Revenue-Trading Expenses

Cash or Bank Account: Records cash inflows & outflows Clubs & Societies Receipts & Payments Account: Is actually a cash book by another name

Profit & Loss A/c: Records net profit or loss Clubs & Societies Income & Expenditure A/c: Same principle as Profit & Loss A/c Records surplus or deficit

Clubs & Societies Recall that … Difference … Clubs & Societies
Balance Sheet: Assets = Accumulated Fund + Liabilities Trading Concern Balance Sheet: Assets = Owner’s Equity + Liabilities

Clubs & Societies What have we learnt today? Distinguish between trading & non-trading concerns – profit motive? Different accounts used: Receipts & Payments A/c Bar Trading A/c Income & Expenditure A/c Accumulated Fund

Clubs & Societies End of Lesson 1: 2 periods (70 min)

Do you know ? What are the differences between the Receipts & Payments A/c and the Income & Expenditure A/c ?

Differences… Receipts & Payments A/c Income & Expenditure A/c
1. Summary of total receipts and payments of cash and cheques.  Equivalent to a summarised form of a Cash Book of a trading concern. Income & Expenditure A/c 1. Summary of the operating expenses and revenue items.  Equivalent to a Profit and Loss Account of a trading concern.

Differences… Differences…
Receipts & Payments A/c 2. Contains both capital and revenue expenditure as well as capital and revenue receipts. Income & Expenditure A/c 2. Contains only revenue expenditure and revenue receipt items only.

3. Includes those revenue and capital items that are actually paid for and received.  Items which may refer to preceding or succeeding periods are also included. Income & Expenditure A/c 3. Includes only revenue items incurred or earned during the current accounting period.  Excludes prepaid expenses, unearned revenue.  Includes accrued expenses, accrued revenue.

4. Final balance is the balance of cash in hand, or cash at bank. Is a current asset in the Balance Sheet.  Overdraft is a current liability. Income & Expenditure A/c 4. Final balance shows either a surplus or a deficit for the period.  Surplus is added to the accumulated fund in the Balance Sheet.  Deficit is deducted from accumulated fund.

Receipts and Payments Account
Presentation … Receipts and Payments Account Debit all receipts (both capital & revenue receipts) Credit all payments (both capital & revenue expenditure) Income and Expenditure Account Debit all current year revenue expenditure Credit all current year revenue receipts

the Receipts and Payments Account for Weekend Football Club.
Exercise: Prepare the Receipts and Payments Account for Weekend Football Club.

Weekend Football Club provided you with the following information regarding the cash movements of its club: $ Cash at bank as at 1 January ,000 Receipts for the year: Subscriptions 1,000 Entrance Fees Collections at Matches Sale of Refreshments Payments for the year: Football Equipment Cost of Refreshments Sundry Expenses Maintenance of Clubhouse

Weekend Football Club Receipts and Payments Account $ $ 1999 Jan 1 Dec 31 1999 Dec 31 Balance b/d ,000 Football Equipment Subscriptions ,000 Cost of Refreshments 200 Entrance Fees Sundry Expenses Collections at Matches 600 Maintenance of Clubhouse Sale of Refreshments Balance c/d ,250 4,350 4,350 2000 Jan 1 Balance b/d ,250

Can you prepare the Income and Expenditure Account
Weekend Football Club Receipts and Payments Account $ $ 1999 Jan 1 Dec 31 1999 Dec 31 Balance b/d ,000 Football Equipment Subscriptions ,000 Cost of Refreshments 200 Entrance Fees Sundry Expenses Collections at Matches 600 Maintenance of Clubhouse Sale of Refreshments Balance c/d ,250 4,350 4,350 2000 Jan 1 Balance b/d ,250 Can you prepare the Income and Expenditure Account for the year ended 31 December 1999?

Weekend Football Club Receipts and Payments Account $ $ 1999 Jan 1 Dec 31 1999 Dec 31 Balance b/d ,000 Football Equipment Subscriptions ,000 Cost of Refreshments 200 Entrance Fees Sundry Expenses Collections at Matches 600 Maintenance of Clubhouse Sale of Refreshments Balance c/d ,250 4,350 4,350 2000 Jan 1 Balance b/d ,250 Weekend Football Club Income and Expenditure Account for the year ended 31 December 1999 Expenditure $ Income $

Weekend Football Club Receipts and Payments Account $ $ 1999 Jan 1 Dec 31 1999 Dec 31 Balance b/d ,000 Football Equipment Subscriptions ,000 Cost of Refreshments 200 Entrance Fees Sundry Expenses Collections at Matches 600 Maintenance of Clubhouse Sale of Refreshments Balance c/d ,250 4,350 4,350 2000 Jan 1 Balance b/d ,250 Weekend Football Club Income and Expenditure Account for the year ended 31 December 1999 Expenditure $ Income $ Cost of Refreshments Subscriptions ,000 Sundry Expenses Entrance Fees Collections at Matches Maintenance of Clubhouse Surplus ,500 Sale of Refreshments 2,350 2,350

End of lesson 2: 1 period (35 min)

Trading Account Clubs and societies are not formed with a view to make profit. Clubs may operate a restaurant or bar selling refreshment and food to members. A Trading Account is prepared to determine the profit or loss. Records of stock of refreshment, refreshment debtors and creditors will be needed. Adjustments to find out the exact amount of sales, purchases and other expenses will be required to prepare the Trading Account.

Refreshment Trading Account
Example: Preparing the Refreshment Trading Account for Weekend Golf Club…

Weekend Golf Club provided the following information:
Receipts and Payments Account for the year ended 31 June 2000 $ $ Refreshment debtors ,000 Refreshment creditors ,000 Sale of refreshment ,000 Wages for the preparation of refreshments ,000 Cost of refreshment ,000 Additional Information: 1 July 1999 31 June 2000 $ $ Refreshment stock , ,500 Refreshment debtors ,500 Refreshment creditors ,000 Accrued wages for the preparation of refreshments ,000

Step 1: Calculate Credit Sales of Refreshments

Refreshment Debtors’ Account
Step 1: Calculate Credit Sales of Refreshments Refreshment Debtors’ Account 1999 Jul 1 $ 2000 Jun 30 $ Balance b/d Cash or Bank 4,000 Sales 10,000 Balance c/d 6,500 10,500 10,500 2000 Jul 1 Balance c/d 6,500 Credit sales $10,000 is the balancing figure.

Step 2: Calculate Total Sales of Refreshments

Step 2: Calculate Total Sales of Refreshments
$ Credit Sales of Refreshments 10,000 Cash Sales of Refreshments 8,000 Total Sales of Refreshments ,000 $18,000 is transferred to the Trading Account

Step 3: Calculate Credit Purchases of Refreshments

Refreshment Creditors’ Account
Step 3: Calculate Credit Purchases of Refreshments Refreshment Creditors’ Account 2000 Jun 30 $ 1999 Jul 1 $ Cash or Bank 1,000 Balance b/d Purchases ,100 Balance c/d 3,000 4,000 4,000 2000 Jul 1 Balance c/d 3,000 Credit purchases $3,100 is the balancing figure.

Step 4: Calculate Total Purchases of Refreshments
$ Credit Purchases of Refreshments 3,100 Cash Purchases of Refreshments 5,000 Total Purchases of Refreshments ,100 $8,100 is transferred to the Trading Account

Step 5: Calculate wages for the preparation
of refreshment

Step 5: Calculate wages for the preparation of refreshment
Wages Account 2000 Jun 30 $ 1999 Jul 1 $ Cash or Bank 3,000 Balance b/d Trading A/c 3,100 Balance c/d 1,000 4,000 4,000 2000 Jul 1 Balance c/d 1,000 Wages $3,100 incurred for the year is the balancing figure.

Step 6: Prepare the Refreshment Trading Account
Weekend Golf Club Refreshment Trading Account for the year ended 30 June 2000 $ $ Opening Stock ,000 Sales ,000 Add Purchases ,100 10,100 Less Closing Stock (3,500) Cost of Sales ,600 Gross Profit ,400 18,000 18,000 Wages for preparation of refreshment ,100 Gross Profit ,400 Net Profit ,300 11,400 11,400

Step 7: Transferring refreshment net profit
to the Income and Expenditure Account Weekend Golf Club Income and Expenditure Account for the year ended 30 June 2000 Debit all current year revenue expenditure Credit all current year revenue receipts

Step 7: Transferring refreshment net profit
to the Income and Expenditure Account Weekend Golf Club Income and Expenditure Account for the year ended 30 June 2000 $ $ Net Profit from Refreshments 8,300

End of lesson 3: 2 periods (70 min)

Balance Day Adjustments
Most records of clubs are kept using the single- entry system. Balance day adjustments are needed to get the necessary data to prepare the accounts.

Adjustments are usually made to the following: Subscription Account – to find exact subscription for the year. Trading Account – to find sales, purchases, expenses incurred for the year. Other revenue generating activities – to find net gain or loss from the event. Disposal of new assets and acquisition of new assets – to record a gain or loss on disposal.

Subscription Account Members’ subscriptions make up the main source of a club or society’s income. Club needs to know its exact subscription income to find out if it is able to finance its normal operations. Problem: Not every member will pay on time.

Subscription Account Subscription is a revenue receipt and recorded in the Subscription Account. Subscription owed by members is known as subscription due or subscription in arrears. Subscription paid by members in the current financial year for the next financial year is known as subscription in advance.

Subscription Account When an arrears or advance payment happens,
adjustments in the preparation of the Subscription Account have to be made so that only the amount of revenue earned during the current year is included in the current year’s Income and Expenditure Account according to the matching principle.

Subscriptions Account Dr Cr
$ $ Subscription received in advance b/d (collected in the previous year) Subscription in arrears b/d (not collected during the previous year) Income & Expenditure Account (exact amount of Subscription revenue for the current year) Total cash received as subscription during the current year Subscription in advance c/d (collected for subsequent year) Subscription in arrears c/d (not yet received for the current year)

Receipts and Payments Account for the year ended 31 Jun 2000
Weekdays Country Club has the following in the books: Receipts and Payments Account for the year ended 31 Jun 2000 $ $ Subscription 5,500 Additional information: 1 Jul 1999 31 Jun 2000 $ $ Subscription in arrears 1, Subscription in advance Question: What would the Subscription Account look like?

the subscription for the
Subscriptions Account 1999 Jul 1 $ 1999 Jul 1 $ Balance b/d ,500 Balance b/d 2000 Jun 30 2000 Jun 30 Bank 5,500 Income and Expenditure A/c 4,550 Balance c/d Balance c/d 6,950 6,950 2000 Jul 1 2000 Jul 1 Balance b/d Balance b/d In this example, the subscription for the current year is the balancing figure.

Income and Expenditure Account for the year ended 30 June 2000
Subscriptions Account 1999 Jul 1 $ 1999 Jul 1 $ Balance b/d ,500 Balance b/d 2000 Jun 30 2000 Jun 30 Bank 5,500 Income and Expenditure A/c 4,550 Balance c/d Balance c/d 6,950 6,950 2000 Jul 1 2000 Jul 1 Balance b/d Balance b/d Income and Expenditure Account for the year ended 30 June 2000 $ $

Income and Expenditure Account for the year ended 30 June 2000
Subscriptions Account 1999 Jul 1 $ 1999 Jul 1 $ Balance b/d ,500 Balance b/d 2000 Jun 30 2000 Jun 30 Bank 5,500 Income and Expenditure A/c 4,550 Balance c/d Balance c/d 6,950 6,950 2000 Jul 1 2000 Jul 1 Balance b/d Balance b/d Income and Expenditure Account for the year ended 30 June 2000 $ $ Subscription ,550

Subscriptions Account
1999 Jul 1 $ 1999 Jul 1 $ Balance b/d ,500 Balance b/d 2000 Jun 30 2000 Jun 30 Bank 5,500 Income and Expenditure A/c 4,550 Balance c/d Balance c/d 6,950 6,950 2000 Jul 1 2000 Jul 1 Balance b/d Balance b/d Balance Sheet as at 30 June 2000 $ $ Current Assets Current Liabilities

Subscriptions Account
1999 Jul 1 $ 1999 Jul 1 $ Balance b/d ,500 Balance b/d 2000 Jun 30 2000 Jun 30 Bank 5,500 Income and Expenditure A/c 4,550 Balance c/d Balance c/d 6,950 6,950 Balance Sheet as at 30 June 2000 $ $ Current Assets Current Liabilities Subscription in arrears Subscription in advance 900

Other Revenue Generating Activities
Examples are charging for the use of club facilities or holding dances and socials. Expenses incurred from these activities must be deducted from the related revenue obtained to show a GAIN or LOSS. The net proceeds from such activities are part of the current operating revenue and recorded in the Income and Expenditure Account.

Income and Expenditure Account for the year ended 31 Jun 2000
Example: Everyday Dance Club held a dance competition for its members. Registration fees collected was $330. Prizes and refreshments for the competitors amounted to $200. What is the gain or loss from this event? Everyday Dance Club Income and Expenditure Account for the year ended 31 Jun 2000 $ $ Gain from dance competition ($330-$200) 130

Disposal of Old Asset and Acquisition of New Asset
Whenever a non-trading organisation disposes an asset, it can make a “gain” or “loss” due to previous under-provision or over-provision of depreciation. “Gain” or “loss” is usually treated as a revenue item. “Gain” or “loss” is normally not capitalised. “Gain” or “loss” is recorded in the Income and Expenditure Account.

Weekdays Football Club has the following in the books: Receipts and Payments Account for the year ended 31 Jun 2000 $ $ New football equipment 300 Sale of surplus football equipment (book value $200) 150 Additional information: 1 Jul 1999 31 Jun 2000 $ $ Football equipment at valuation Questions: - Is there a GAIN or LOSS on disposal? -What is the DEPRECIATION for the year?

Weekdays Football Club has the following in the books: Receipts and Payments Account for the year ended 31 Jun 2000 $ $ New football equipment 300 Sale of surplus football equipment (book value $200) 150 Additional information: 1 Jul 1999 31 Jun 2000 $ $ Football equipment at valuation Questions: - Is there a GAIN or LOSS on disposal?

Is there a GAIN or LOSS on disposal? Sale of surplus football equipment $150 Book value of equipment sold $200 Loss on sale of football equipment $50 Weekdays Football Club Income and Expenditure Account for the year ended 31 Jun 2000 $ $ Loss on sale of football Equipment ($150-$200) 50

Weekdays Football Club has the following in the books: Receipts and Payments Account for the year ended 31 Jun 2000 $ $ New football equipment 300 Sale of surplus football equipment (book value $200) 150 Additional information: 1 Jul 1999 31 Jun 2000 $ $ Football equipment at valuation Questions: -What is the DEPRECIATION for the year?

What is the DEPRECIATION for the year?
2 methods to arrive at the answer …. Method 1: Balance as at 1 Jul Add Purchases 300 800 Less Sale of equipment (200) 600 Depreciation = $600 - $550 = $50

What is the DEPRECIATION for the year?
2 methods to arrive at the answer …. Method 2: Football Equipment Account $ $ Balance b/d 500 Depreciation 50 Purchases Disposal 200 Balance c/d 550 800 800

What is the DEPRECIATION for the year? Remember to show your working for calculating depreciation whatever method you use …. Weekdays Football Club Income and Expenditure Account for the year ended 31 Jun 2000 $ $ Depreciation of football equipment 50 Loss on sale of football equipment 50

End of lesson 4: 2 periods (70 min)

Accumulated Fund What is it? Recall:
Equivalent to the Capital Account of a trading concern. Recall: For a trading concern: CAPITAL = ASSETS - LIABILITIES For a non-trading concern: ACCUMULATED FUND = ASSETS - LIABILITIES

Accumulated Fund What affects it? Legacy
Money collected for capital purpose, eg. construction of clubhouse Surplus of income over expenditure Deficit of income over expenditure is DEBITED to the ACCUMULATED FUND Final balance of the accumulated fund represents the NET VALUE of the club at the end of the accounting year. These will increase the accumulated fund and are CREDITED to the ACCUMULATED FUND.

Weekend Rollarblading Club has the following in its books:
Receipts and Payments Account 2000 Jan 1 $ 2000 Dec 31 $ Balance b/d 2,000 Rent 1,500 Dec 31 Locker fees Extension to clubhouse 1,900 Subscription: Sundry exp On 1 Jan 2000, the club had the following assets: Rollarblading equipment $600 Clubhouse $12,000 Additional information: Rent paid included $500 for accrued rent from the previous year. As at 31 Dec 2000, accrued locker fees was $210.

What information would I need
to calculate the Accumulated Fund as at 1 Jan 2000?

Weekend Rollarblading Club has the following in its books:
Receipts and Payments Account 2000 Jan 1 $ 2000 Dec 31 $ Balance b/d 2,000 Rent 1,500 Dec 31 Locker fees Extension to clubhouse 1,900 Subscription: Sundry exp On 1 Jan 2000, the club had the following assets: Rollarblading equipment $600 Clubhouse $12,000 Additional information: Rent paid included $500 for accrued rent from the previous year. As at 31 Dec 2000, accrued locker fees was $210.

Calculation of Accumulated Fund as at 1 Jan 2000:
$ Assets Receipts and Payments A/c as at 1 Jan 2000 Cash at Bank 2,000 Subscription in arrears Rollarblading equipment Clubhouse ,000 14,700 Less: Liabilities Accrued rent (500) Accumulated fund as at 1 Jan ,200

Balance Sheet as at 31 December 2000
Presentation … Weekend Rollarblading Club Balance Sheet as at 31 December 2000 Accumulated Fund $ Balance as at 1/1/ ,200 Add Surplus XXX Balance as at 31/12/ XXX

End of lesson 5: 1 period (35 min)

Clubs & Societies Done by: Koh Ngin Lan Edna.

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