Paper 2 Answering Technique
Paper 2 Answering Technique: Accounting for Clubs and Societies
A step-by-step guide to answering Paper 2 structured questions for Chapter 6, covering how to read the question, the working order, subscription adjustments, presentation of accounts, and how to show working for method marks.
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Read and code the question
- Identify which account is asked for: Receipts and Payments Account, Members' Subscription Account, Trading Account, Income and Expenditure Account, or Statement of Financial Position. Underline the key words before you start.
- Note the required format: 'T' form or statement form. Follow whatever is stated because some marks are presentation marks.
- Copy the accounting period into the heading, e.g. 'for the year ended 31 December', so the three-line title is complete.
- List every adjustment (subscriptions in arrears, subscriptions in advance, depreciation, accrued expenses) in the margin before writing any account.
- Separate revenue items from capital items as early as possible so you know which go to the Income and Expenditure Account and which go to the Statement of Financial Position.
Plan the working order
- Start by computing the opening Accumulated Fund (total assets less total liabilities at the start of the period) when it is asked for or needed for the statement.
- Prepare the supporting accounts first: the Members' Subscription Account to obtain the current year's subscription, and a small Trading Account for the profit or loss of periodic activities such as canteen sales.
- Transfer the figures you have computed into the Income and Expenditure Account; only revenue items are carried in.
- Finish with the Statement of Financial Position using the surplus or deficit and all closing balances.
- Cross-reference: every figure in the statement must trace back to the supporting account that produced it.
Get the subscription adjustments right
- Subscriptions in arrears are an asset: balance b/d on the debit side at the start and balance c/d on the credit side at the end.
- Subscriptions in advance are a liability: balance b/d on the credit side at the start and balance c/d on the debit side at the end.
- Bad subscriptions are entered on the credit side when overdue subscriptions are written off as uncollectable.
- The current-year subscription transferred to the Income and Expenditure Account is the balancing figure of this account.
- Be ready for 'discuss the reason' questions: the subscription in the Receipts and Payments Account differs from the one in the Income and Expenditure Account because of the arrears and advance adjustments.
Present the accounts and statements correctly
- Write a three-line heading on every account and statement: club name, name of the account or statement, and the period or date.
- Receipts and Payments Account in 'T' form: receipts on the debit side beginning with the opening cash and bank balance, payments on the credit side, closed off with the balance c/d.
- In the Income and Expenditure Account use the term Surplus when income exceeds expenditure, or Deficit when expenditure exceeds income; never write 'net profit'.
- Isolate periodic activities: prepare a Trading Account for the profit or loss of the activity (e.g. canteen sales) and carry only that profit or loss into the Income and Expenditure Account.
- In statement form, use tidy columns, subtotals, and the label 'Less' for expenses or liabilities so the layout is clear.
Show working for method marks
- Show the opening Accumulated Fund formula with each component: total assets less total liabilities at the start of the period.
- Write the working for subscriptions, depreciation, and accrued expenses in brackets or a side note so the marker can see the method even if the final answer is wrong.
- Clearly label every balancing figure: Surplus or Deficit, and each balance c/d.
- Bring the balance down (b/d) after closing an account to show continuity into the next period.
Manage time and cross-check
- Allocate time according to the number of sub-marks in each part; do not get stuck too long on one adjustment.
- Check that the Statement of Financial Position balances: total assets equal Accumulated Fund plus liabilities.
- Ensure the closing Accumulated Fund equals the opening Accumulated Fund plus Surplus (or less Deficit) plus any capital donation.
- Recheck terminology: use Surplus and Deficit for a non-profit club, not net profit or loss.
| Particulars (Debit) | RM | Particulars (Credit) | RM |
|---|---|---|---|
| Balance b/d (subscriptions in arrears) | 200 | Balance b/d (subscriptions in advance) | 300 |
| Income and Expenditure | 4,050 | Bank (subscriptions received) | 4,000 |
| Balance c/d (subscriptions in advance) | 250 | Subscriptions written off | 50 |
| Balance c/d (subscriptions in arrears) | 150 | ||
| 4,500 | 4,500 |
Cash received (RM4,000) differs from the current-year subscription (RM4,050) because of the arrears, advance, and written-off adjustments.
| Particulars | RM |
|---|---|
| Assets at the start of the period | |
| Equipment | 5,000 |
| Bank | 3,000 |
| Subscriptions in arrears | 200 |
| Total assets | 8,200 |
| Less: Liabilities at the start of the period | |
| Subscriptions in advance | 300 |
| Creditors | 500 |
| Total liabilities | 800 |
| Accumulated Fund (opening) | 7,400 |
Opening Accumulated Fund = total assets less total liabilities at the start of the period.
| Aspect | Receipts and Payments Account | Income and Expenditure Account |
|---|---|---|
| Basis of recording | Cash basis, all cash received and paid | Accrual basis, income and expenditure for the period |
| Capital and revenue items | Both are recorded | Revenue items only |
| Closing balance | Cash and bank balance | Surplus or Deficit |
| Adjustments | No adjustments | Has adjustments (accrued, prepaid, depreciation) |
Capital items and receipts that are not current-period income in the Receipts and Payments Account are not transferred to the Income and Expenditure Account.
Why does the subscription in the Receipts and Payments Account differ from the one in the Income and Expenditure Account?
The Receipts and Payments Account records the actual cash received, including last year's arrears and advances for next year. The Income and Expenditure Account records only the subscription earned for the current period, after adjusting for subscriptions in arrears and in advance.
When do I use the term Surplus and when Deficit?
Use Surplus when total income exceeds total expenditure for the period, and Deficit when total expenditure exceeds total income. Because clubs and societies are not profit-oriented, these terms are used rather than net profit or loss.
Are capital items such as the purchase of equipment included in the Income and Expenditure Account?
No. Capital expenditure such as the purchase of equipment and capital receipts such as donations for a building fund are not included in the Income and Expenditure Account; they are recorded in the Statement of Financial Position. Only revenue items go into the Income and Expenditure Account.
Other resources for this chapter
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