The cashbook will is referred to as a receipts and payments where entries are the same as those of a cashbook. But this distinction is not really necessary. Just use cashbook. 2. Instead of income statement, we have an income and expenditure account. If incomes exceed expenditure, then we have a surplus instead of a profit and if incomes are less than expenditure then we have a deficit (instead of a loss) 3. Because the club is not formed by any one owner (has no owner), it is funded by members’ contributions, donations, income from investments to get an accumulated und instead of capital.
The organization may carry out some trading to finance some of the clubs activities. In case a club or association has a trading aactivity, then in addition to the income and expenditure account and the statement of financial position we also prepare an income statement for the trading aactivity. 9. 2 Format of the Final Accounts Name Income and Expenditure Account for the year ended 31 December Profit from trading activities Subscriptions Income from investments Donations Income from other activities [dinner dance, raffles, festivals] . Incomes Expenalture Depreciation
Subscriptions: These are the amounts received by the club from the members to renew their membership. It is often paid on an annual basis. It is income for the club and therefore reported in the income and expenditure account. Depending on the ppolicy of a club, any subscriptions due but not received are shown as accrued income (receivables for subscriptions) in the statement of financial position. Any amounts prepaid are shown as prepaid (Payables for subscriptions). Some clubs will not report subscriptions as income until it is received in form of cash. 2 Income from Investments:
Some clubs invest excess cash in the bank (fixed deposit account), shares of limited companies, treasury bills and any other investment that may be available. – If the club is investing with no specific intention (i. e a general investment) then income from this investment should be reported in the income and expenditure account. If the investment is for a specific purpose and relates to a specific fund (e. g building fund) it will not be reported in the income and expenditure account but creoltea alrectly to These are funds set up for a specific purpose and not general. They will be shown ogether with the accumulated fund.
Any incomes relating to these funds, will be credited directly to the funds and any expenses will be taken off from these funds e. g. building fund, education fund. Life Membership Fund Some members may pay some amount to become life members of the club. If this happens, there may be a need to spread out this income over the expected life of the members in the club. Depending on the ppolicy of a club, the following accounting treatment may be allowed: i. The full amount is reported in the Income and Expenditure account in the year it is received and therefore no balance is retained in he life membership account. ‘. The amount is shown separately in the life membership fund with no transfer in the Income and Expenditure account and hence no balance in the life membership account. iii. To transfer some amounts from the life membership funds to the income and expenditure account over the expected life of membership to the club. This last method is recommended Example 9. 1 The following trial balance was extracted from the books of Literary and Philosophical Society
