Form 5 · Chapter 6

Accounting for Clubs and Societies

Perakaunan untuk Kelab dan Persatuan

Book a Trial Class

One-hour paid trial · Same-day reply · from RM50/hr

14 teaching hours

What this chapter covers

Form 5 Chapter 6 introduces accounting for non-profit organisations, namely clubs and societies such as Kelab Sukan Aman or Persatuan Belia Maju. Unlike a business, whose main aim is profit, a club or society exists for the welfare, activities and interests of its members. The double entry, ledger and adjustment skills you learned earlier are still used, but some terms change: Capital becomes the Accumulated Fund (Dana Terkumpul), Net Profit becomes Surplus (Lebihan), and Net Loss becomes Deficit (Kurangan). The records are kept by the club treasurer (bendahari).

This chapter reuses nearly every skill you have already learned, only in a non-profit context. You will prepare a Receipts and Payments Account (a summary of the club's cash), a Members' Subscription Account to adjust for subscriptions in arrears and in advance, an Income and Expenditure Account that uses the accrual basis to find the Surplus or Deficit, and finally a Statement of Financial Position showing assets, liabilities and the Accumulated Fund. The main skill tested is separating capital items from revenue items, and converting cash received into the true income of the year.

This chapter tests understanding, not the ability to copy figures. Many candidates lose marks because they treat cash received as income without adjustment, or put the purchase of equipment into the Income and Expenditure Account. You need to understand the accrual basis and the difference between cash flow and an organisation's true financial performance.

Content Standards

15.1 Clubs and Societies

Kelab dan Persatuan

Learning Standards (official DSKP wording, in Malay)

15.1.1Menerangkan: (i) takrif Kelab dan Persatuan di bawah Akta Pertubuhan 1966 (ii) tatacara dan matlamat penubuhan sesebuah Kelab dan Persatuan berbanding entiti yang berorientasikan keuntungan (iii) sumber utama kewangan Kelab dan Persatuan
15.1.2Membanding akaun-akaun Kelab dan Persatuan dengan akaun-akaun entiti yang berorientasikan keuntungan
15.1.3Menganalisis sama ada aktiviti mencari keuntungan bagi sesebuah Kelab dan Persatuan bertentangan dengan motif utama penubuhannya

15.2 Receipts and Payments Account

Akaun Penerimaan dan Pembayaran

Learning Standards (official DSKP wording, in Malay)

15.2.1Menerangkan tujuan penyediaan Akaun Penerimaan dan Pembayaran
15.2.2Memberi contoh item penerimaan dan pembayaran
15.2.3Menyediakan Akaun Penerimaan dan Pembayaran dalam bentuk ’T’ dan format penyata
15.2.4Membezakan Akaun Penerimaan dan Pembayaran dengan Buku Tunai bagi entiti yang berorientasikan keuntungan

15.3 Membership Subscription Account

Akaun Yuran Ahli

Learning Standards (official DSKP wording, in Malay)

15.3.1Menerangkan maksud Yuran
15.3.2Menerangkan maksud Yuran Semasa, Yuran Lapuk, Yuran Belum Terperoleh dan Yuran Belum Terima
15.3.3Menyediakan Akaun Yuran Ahli

15.4 Income and Expenditure Account

Akaun Pendapatan dan Perbelanjaan

Learning Standards (official DSKP wording, in Malay)

15.4.1Menerangkan tujuan penyediaan Akaun Pendapatan dan Perbelanjaan
15.4.2Menerangkan maksud lebihan dan kurangan pendapatan
15.4.3Memberi contoh hasil dan belanja bagi Kelab dan Persatuan
15.4.4Mentafsir Pendapatan Hasil, Pendapatan Modal, Perbelanjaan Hasil dan Perbelanjaan Modal
15.4.5Menyediakan Akaun Perdagangan dalam bentuk ’T’ dan format penyata
15.4.6Mentaksir untung atau rugi aktiviti berkala bagi Kelab dan Persatuan
15.4.7Menghasilkan Akaun Pendapatan dan Perbelanjaan dalam bentuk ’T’ dan format penyata
15.4.8Memberi alasan item yang terdapat dalam Akaun Penerimaan dan Pembayaran tidak direkodkan dalam Akaun Pendapatan dan Perbelanjaan
15.4.9Membahas sebab nilai item yang direkodkan dalam Akaun Penerimaan dan Pembayaran tidak sama dengan nilai item yang direkodkan dalam Akaun Pendapatan dan Perbelanjaan

15.5 Statement of Financial Position of Clubs and Societies

Penyata Kedudukan Kewangan Kelab dan Persatuan

Learning Standards (official DSKP wording, in Malay)

15.5.1Menerangkan maksud Dana Terkumpul
15.5.2Mengira Dana Terkumpul
15.5.3Menghasilkan Penyata Kedudukan Kewangan dalam bentuk ’T’ dan format penyata
15.5.4Merumuskan perbezaan komponen Dana Terkumpul Kelab dan Persatuan dengan komponen Ekuiti Pemilik entiti yang berorientasikan keuntungan dalam Penyata Kedudukan Kewangan

Source: DSKP KSSM Prinsip Perakaunan Tingkatan 5

Key ideas in this chapter

Characteristics of clubs and societies as non-profit bodies

Clubs and societies do not run a business for profit; their aim is member welfare and activities. Typical income sources include members' subscriptions, donations, sales income (for example a club cafeteria), and collections from events such as dinners or competitions. Expenses include hall rental, caretaker wages, sports gear and depreciation of equipment.

Terminology changes to suit the non-profit context. Capital becomes the Accumulated Fund, Net Profit becomes Surplus, Net Loss becomes Deficit, and the Income Statement becomes the Income and Expenditure Account. The Cash Book is summarised into a Receipts and Payments Account. Learn these matching terms so you do not mislabel accounts in your answers.

The Receipts and Payments Account

This account is a summary of the club's Cash Book. It is a real account that begins with the opening cash/bank balance, records all money received on the debit side and all money paid on the credit side, regardless of whether an item is capital or revenue, and regardless of period. It ends with the closing cash/bank balance.

Example: if the club receives subscriptions of RM3,000 and sells dinner tickets of RM800, the debit entries are Subscriptions RM3,000 and Dinner RM800. If the club buys equipment for RM1,200 and pays rent RM600, the credit entries are Purchase of Equipment RM1,200 and Rent RM600. Note that the purchase of equipment (a capital item) also appears here because this account is cash-based.

Weaknesses of the Receipts and Payments Account

Because it is purely cash-based, the Receipts and Payments Account does not separate capital from revenue items, does not adjust for subscriptions in arrears or in advance, does not account for accrued or prepaid expenses, and does not record non-cash items such as depreciation. It therefore cannot show whether the club achieved a Surplus or a Deficit.

This is why a club must still prepare an Income and Expenditure Account. For instance, if RM3,000 of subscriptions is received but RM150 of it is next year's subscription (in advance), this year's true income is not RM3,000. The Receipts and Payments Account cannot show this difference, but the Income and Expenditure Account can.

Members' Subscription Account: adjusting arrears and advances

The Members' Subscription Account is used to find the true subscription figure transferred to the Income and Expenditure Account. Subscriptions in arrears (not yet paid by members) are an asset, while subscriptions in advance (paid early for next year) are a liability. On the debit side: opening arrears b/d, subscriptions to Income and Expenditure, and closing advance c/d. On the credit side: opening advance b/d, cash received, and closing arrears c/d.

Worked example: opening arrears RM200, opening advance RM50, cash received RM3,000, closing arrears RM150, closing advance RM100. Subscriptions to Income and Expenditure = 3,000 + 150 (closing arrears) - 200 (opening arrears) + 50 (opening advance) - 100 (closing advance) = RM2,900. This RM2,900 is the true subscription income for the year.

The Income and Expenditure Account

This account is the club's equivalent of an Income Statement. It records only revenue income and revenue expenses for the current year on the accrual basis, and ignores all capital items. Depreciation of equipment, accrued expenses and write-offs are also adjusted here. If income exceeds expenditure the result is a Surplus; if expenditure exceeds income the result is a Deficit.

Example: subscription income RM2,900, donations RM300 and cafeteria trading surplus RM400 give total income of RM3,600. Expenditure is rent RM600, wages RM1,200 and depreciation of equipment RM500 (total RM2,300), so Surplus = 3,600 - 2,300 = RM1,300. Note that the earlier RM1,200 purchase of equipment is not included here because it is a capital item.

Surplus, Deficit and the Accumulated Fund

The Surplus or Deficit from the Income and Expenditure Account is transferred to the Accumulated Fund, just as profit or loss is transferred to the Capital account in a business. Closing Accumulated Fund = opening Accumulated Fund + Surplus (or - Deficit). The Accumulated Fund represents the net worth the club has built up since it was formed.

To find the opening Accumulated Fund when it is not given, use the accounting equation at the start of the year: opening Accumulated Fund = total opening Assets - total opening Liabilities. Example: equipment RM5,000, bank RM1,200 and subscriptions in arrears RM200 (total assets RM6,400), less subscriptions in advance RM50 and creditors RM150 (total liabilities RM200), gives an opening Accumulated Fund of RM6,200.

Special items: trading account, donations and life membership

Some clubs run sales-based activities such as a club shop or cafeteria. For these, a short trading account is prepared to find the gross profit or loss of that activity, and only its net result is transferred to the Income and Expenditure Account as a single line. Example: cafeteria sales RM2,000 less cost of purchases RM1,600 gives a surplus of RM400 carried to the Income and Expenditure Account.

Donations for general purposes are treated as income of the current year, but donations for a specific purpose (for example a building fund) are usually capitalised and added to the Accumulated Fund rather than treated as income. Life membership fees are normally treated as a capital receipt and are not taken to the Income and Expenditure Account in one lump sum.

Statement of Financial Position of clubs and societies

The format of this statement is similar to that of a business. Non-current assets include equipment and furniture after deducting accumulated depreciation. Current assets include inventory, subscriptions in arrears, bank and cash. Current liabilities include subscriptions in advance, accrued expenses and creditors. The equity section is replaced by the Accumulated Fund.

Short example: non-current asset (equipment) RM5,700, current assets (arrears RM150 + bank RM1,750) RM1,900, total assets RM7,600. Current liability (subscriptions in advance RM100) RM100. Accumulated Fund = 7,600 - 100 = RM7,500, which equals opening Accumulated Fund RM6,200 plus Surplus RM1,300. This agreement proves your statement balances.

Ordering your steps in a full question

A typical question in this chapter gives the Receipts and Payments Account plus additional information (arrears, advance, depreciation), and asks you to prepare the Members' Subscription Account, the Income and Expenditure Account, and the Statement of Financial Position. A safe order: compute the opening Accumulated Fund first, prepare the Members' Subscription Account to obtain the subscription figure, then build the Income and Expenditure Account, and finally lay out the Statement of Financial Position.

Cross-check every answer: make sure the Surplus or Deficit has been transferred to the Accumulated Fund, and that total assets equal the Accumulated Fund plus liabilities so your statement balances.

Common mistakes

Study plan for this chapter

Learn the terminology first: build a comparison table of business versus club (Capital/Accumulated Fund, Profit/Surplus, Loss/Deficit, Income Statement/Income and Expenditure Account).
Practise separating capital items from revenue items with a list of examples: purchase of equipment (capital) versus rent and depreciation (revenue).
Memorise and drill the Members' Subscription Account format until you can place arrears and advances on the correct debit or credit side without hesitation.
Practise converting the Receipts and Payments Account into the Income and Expenditure Account step by step, adjusting for depreciation, accruals and prepayments.
Practise computing the opening Accumulated Fund using total opening Assets less total opening Liabilities across a range of questions.
Complete several full questions covering the Members' Subscription Account, Income and Expenditure Account, and Statement of Financial Position together, then check that the statement balances.
Each time you finish, cross-check: make sure the Surplus/Deficit is transferred to the Accumulated Fund and the statement balances as proof your answer is correct.

FAQ

What is the difference between the Receipts and Payments Account and the Income and Expenditure Account?

The Receipts and Payments Account is a cash summary recording all money in and out regardless of capital or revenue and with no adjustments. The Income and Expenditure Account records only current-year revenue income and expenses on the accrual basis, and produces a Surplus or Deficit.

Are subscriptions in arrears an asset or a liability?

Subscriptions in arrears are a current asset because members still owe the club their subscription. Subscriptions in advance, on the other hand, are a current liability because the club has received money for next year's service that has not yet been provided.

Why is the purchase of equipment not included in the Income and Expenditure Account?

Because buying equipment is capital expenditure, not a revenue expense. It is recorded as a non-current asset in the Statement of Financial Position, and only its depreciation is charged as an expense in the Income and Expenditure Account.

How do I calculate the opening Accumulated Fund if it is not given?

Use the accounting equation at the start of the year: opening Accumulated Fund = total opening Assets minus total opening Liabilities. For example, if opening assets are RM6,400 and opening liabilities are RM200, the opening Accumulated Fund is RM6,200.

What happens to the Surplus or Deficit once calculated?

It is transferred to the Accumulated Fund: closing Accumulated Fund equals opening Accumulated Fund plus Surplus or minus Deficit. If you want structured guidance, our experienced teachers offer 1-to-1 lessons; a paid trial session starts from RM50/hour (WhatsApp.

Learning materials for this chapter

Other chapters

Analysis and Interpretation of Financial Statements for Decision Making

Chapter 1

Incomplete Records

Chapter 2

Accounting for Internal Control

Chapter 3

Accounting for Partnerships

Chapter 4

Accounting for Companies Limited by Shares

Chapter 5

Cost Accounting

Chapter 7

All chapters →

Need help with Accounting for Clubs and Societies?

One-hour paid trial · Same-day reply · from RM50/hr

Book a Trial Class

Book a Trial Class

One-hour paid trial · Same-day reply