Accounts for Clubs & Societies (Cambridge International IGCSE Accounting)

Clubs & societies

What types of businesses are clubs and societies?

• Clubs and societies are classed as non-trading organisations
• These types of businesses provide a service or facility for a fee called a subscription
• They do not operate with the sole aim of making a profit

What financial statements are prepared for clubs and societies?

• Clubs and societies do not always keep a full set of accounting records

• Their main accounting records tend to be

  • A receipts and payments account

    • This is a simple cash book

  • Trading sections of income statements for each one of any trading activities

    • Such as a café or a shop
    • These are prepared in the same way as for sole traders

  • An income and expenditure account

    • This shows the sources of income and expenses of the organisation
    • This is equivalent to the income statement for a sole trader

  • A subscription account

    • This calculates the fees that should have been received from members during the year

  • A statement of financial position

    • This is prepared in a similar way to that of sole traders

Income statement for clubs & societies

Why might clubs and societies prepare income statements?

• Income statements are prepared when the club or society involves a trading activity which buys and sells goods to raise extra money
• A separate income statement is prepared for each trading activity
• The profits or losses made from the trading activities are transferred to the income and expenditure account

What is included in the income statements for trading activities?

• The income statement is prepared similarly to the trading section of the income statement of any other business
• The main difference is that the gross profit is not always calculated

Layout of an income statement for a trading activity of a club or society

Worked Example Paramount Badminton Club owns badminton courts. It also operates a shop where it sells refreshments and badminton equipment. Shop sales are on a cash basis and purchases made for the shop are on credit.

The treasurer of the club provided the following information.

	1 January 2023	31 December 2023
$	$
Subscriptions in advance	2 200	2 050
Subscriptions in arrears	6 515	6 850
Total shop trade payables	5 375	5 950
Shop inventory	3 600	3 200
Balance at bank	360	220

Other information provided for the year ended 31 December 2023:

Shop sales	48 120
Subscriptions received during the year	38 700
Shop purchases	36 200
Shop purchases returns	2 710
Shop wages	4 820
Wages for the club caretakers	2 650
Insurance for the club	3 640
Bank charges for the club	80
Telephone for the club	380
Advertising for the club	460
Depreciation of equipment for the club	520

Prepare the shop income statement for the year ended 31 December 2023.

Answer:

• Only income and expenses related to the shop appear on the shop income statement

  • Do not include anything that is for the club in general such as subscriptions

• Include all the expenses in the cost of sales

Final answer: Paramount Badminton Club Final answer: Shop Income Statement for the year ended 31 December 2023
	Final answer: $**	Final answer: $
Final answer: Shop sales		Final answer: 48 120
Final answer: Less: Cost of sales
Final answer:** Opening Inventory **	Final answer: 3 600
Final answer:** Purchases **	Final answer: 36 200
	Final answer: 39 800
Final answer:** Less: Purchases returns **	Final answer: 2 710
	Final answer: 37 090
Final answer:** Less: Closing inventory **	Final answer: 3 200	Final answer: 33 890
Final answer:** **		Final answer: 14 230
Final answer:** Shop wages		Final answer: 4 820
Final answer: Shop profit		Final answer: 9 410