Clubs: receipts and payments, subscriptions and income and expenditure

Last time

Before we start: last time, in Manufacturing accounts, you learned these points. Here they are again on one card. Keep them in mind, because today builds on them.

Accounts for a club

A cricket club or a social society does not aim to make a profit. But it still needs accounts, to show members how their money was used. Clubs use different names: receipts and payments, income and expenditure, surplus and deficit, and the accumulated fund.

Club terms

Here are the club terms, with the business term each one replaces.

Receipts and payments account

The receipts and payments account is a summary of the club's cash book: all money received and paid during the year. It includes capital items, such as buying equipment, and amounts for other years, such as subscriptions paid in advance. So it does not show the true surplus or deficit for the year.

Income and expenditure account

The income and expenditure account shows the income and expenses that belong to the year, using the accruals concept, like an income statement. It includes depreciation and adjusts for amounts owing and prepaid. It excludes capital items. Its result is a surplus or a deficit.

Subscriptions

Subscriptions are members' annual fees. The income for the year is the amount that belongs to the year, not the cash received. Subscriptions in arrears are owed by members: a current asset. Subscriptions in advance are paid for next year: a current liability. Received 5,000 dollars, of which 400 is for next year, and 300 is still owed for this year: income is 5,000 minus 400 plus 300, which is 4,900.

The subscriptions account

Opening arrears go on the debit side; opening advances on the credit side. Cash received is credited. The transfer to income and expenditure is debited. Closing advances are carried down on the debit side; closing arrears on the credit side.

Refreshments and other activities

If a club runs a café or bar, a separate trading account shows its profit, like a small income statement. Sales of refreshments, minus their cost, give the profit. Takings of 2,000 dollars with costs of 1,400 give a profit of 600. That profit is then shown as income in the income and expenditure account.

The accumulated fund

The accumulated fund is the club's capital: total assets minus liabilities. To find the opening fund, list the opening assets, such as equipment, bank and subscriptions in arrears, and subtract the liabilities. At the end, add the surplus, or subtract the deficit.

Why a club needs accounts

Members want to know how their subscriptions were spent. The committee uses the accounts to plan: whether to raise subscriptions, or afford new equipment. The treasurer is accountable for the club's money.

Mistakes that lose marks

Mistake one: using the cash received for subscriptions as the income. Mistake two: putting equipment bought in the income and expenditure account. Mistake three: calling the result profit instead of surplus. The fix: club terms, the year's amounts, and no capital items.

The full-marks tip

The full-marks tip: use club words: surplus, deficit, accumulated fund. For subscriptions, adjust the cash for arrears and advances to get the year's income.

On one card

So, on one card: club accounts. Keep it for revision.