Statement of Financial Position (Cambridge International IGCSE Accounting)
Statements of financial position for clubs & societies
What is the layout of the statement of financial position of a club or society?
- The statement of financial position for clubs and societies is prepared in a similar way to other types of businesses
- The statement is split into assets and liabilities
- The main difference is the capital/equity section is replaced with an accumulated fund section
Layout of a statement of financial position for a club or society
What is an accumulated fund?
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The capital of a club or society is referred to as the accumulated fund
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This is made up of
- any capital which is invested into the organisation
- the accumulation of surpluses of income over expenditure over time
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At the end of each year
- A surplus is added to the accumulated fund
- A deficit is subtracted from the accumulated fund
How do I calculate the accumulated fund?
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If the accumulated fund is not given in the question, you will need to calculate it by using the accounting equation
- Assets = Capital + Liabilities
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Accumulated fund is the capital so the equation becomes:
- Assets = Accumulated fund + Liabilities
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Use the two known elements of assets and liabilities to find the accumulated fund
- Accumulated fund = Assets - Liabilities
How do I use the accumulated fund to calculate surplus or deficit?
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To calculate the surplus or deficit for the year:
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Calculate the accumulated fund at the start of the year
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Calculate the accumulated fund at the end of the year
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Calculate the change in the accumulated fund
- If it has increased then this is the surplus
- If it has decreased then this is the deficit
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Worked Example The Chill, Chat and Knit Club offers knitting lessons to club members, as well as selling knitting supplies. It had the following assets and liabilities at 1 January 2023:
$ Club furniture and fittings 1 200 Inventory of knitting supplies 300 Amount owed to suppliers 120 Bank balance 820 At 31 December 2023 the assets and liabilities had the following balances:
$ Club furniture and fittings 1 080 Inventory of knitting supplies 180 Amount owed to suppliers 80 Bank balance 1 150 Calculate the surplus or deficit for The Chill, Chat and Knit Club for the year ended 31 December 2023.
Answer:
- Calculate the accumulated fund at the start of the year
$ $ Assets Club furniture and fittings 1 200 Inventory of knitting supplies 300 Bank balance 820 2 320 Less: Liabilities Amount owed to suppliers 120 Accumulated fund 2 200
- Calculate the accumulated fund at the end of the year
$ $ Assets Club furniture and fittings 1 080 Inventory of knitting supplies 180 Bank balance 1 150 2 410 Less: Liabilities Amount owed to suppliers 80 Accumulated fund 2 330
- The accumulated fund has increased so there has been a surplus
- Find the difference between the start and the end of the year
$2 330 - $2 200 = $130
Final answer: The surplus for the year was $130
Worked Example The Locust Football Club is an amateur football club with members of all ages.
The following information was provided at 1 April 2023.
$ Equipment at cost 16 500 Provision for depreciation of equipment 3 300 Trade payables 2 100 Subscriptions prepaid 500 Accumulated fund ? The following information was provided at 31 March 2024.
$ Trade payables 1 250 Subscriptions prepaid 1 130 Subscriptions owing 800 Bank balance 4 780 Additional notes:
- The income and expenditure account for the year ended 31 March 2024 had a surplus of $3 160
- No equipment was sold or purchased during the year
- Depreciation is charged on equipment using the reducing balance method at 20% per annum
Prepare the statement of financial position of Locust Football Club at 31 March 2024.
Answer:
Calculate the accumulated fund at the start of the year
Calculate the total assets
- Net book value of equipment ($16 500 - $3 300) = $13 200
Calculate the total liabilities
- Trade payables = $2 100
- Subscriptions prepaid = $500
- Total liabilities = £2 100 + $500 = $2 600
Calculate the difference
- $13 200 - $2 600 = $10 600
Calculate the total depreciation to date
Find the year's depreciation using the net book value of the equipment
- 20% × $13 200 = $2 640
Find the total depreciation to date
- $3 300 + $2 640 = $5 940
Find the current net book value of the equipment
- $16 500 - $5 940 = $10 560
Identify whether the subscriptions owing and prepaid are assets or liabilities
- Subscriptions prepaid are current liabilities
- Subscriptions owing are current assets
Prepare the statement using the required format
Final answer: The Locust Football Club
Final answer: Statement of Financial Position at 31 March 2024Final answer: $** Final answer: **$ Final answer: $ Final answer: Non-current Assets Final answer: Cost Final answer: Provision for Depreciation Final answer: Net Book Value Final answer: Equipment Final answer: 16 500 Final answer: 5 940 Final answer: 10 560 Final answer: Current assets Final answer: Other receivables Final answer: 800 Final answer: Bank balance Final answer: 4 780 Final answer: 5 580 Final answer: Total assets Final answer: 16 140 Final answer: Accumulated Fund Final answer: Opening balance Final answer: 10 600 Final answer: Add: Surplus for the year Final answer: 3 160 Final answer: 13 760 Final answer: Current Liabilities Final answer: Trade payables Final answer: 1 250 Final answer: Subscription prepaid Final answer: 1 130 Final answer: 2 380 Final answer: Total liabilities Final answer: 16 140
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