Level: Intermediate
Intermediate Worked Examples: Accounting for Clubs and Societies
Six graded examples covering the Receipts and Payments Account, Subscriptions Account, activity Trading Account, Income and Expenditure Account, and Statement of Financial Position for non-profit clubs and societies.
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Example 1: Receipts and Payments Account (T-form)
Question
Solution plan
The Receipts and Payments Account summarises the club's Cash Book. The opening cash balance and all cash receipts (revenue or capital) go on the debit side; all cash payments on the credit side. Balance c/d = total receipts − total payments, carried down as next year's balance b/d.
| Particulars | RM | Particulars | RM |
|---|---|---|---|
| Balance b/d | 3,500 | Hall rental | 2,400 |
| Members' subscriptions | 8,400 | Competition expenses | 1,900 |
| Donations | 2,000 | Purchase of sports equipment | 3,000 |
| Sale of competition tickets | 1,600 | Groundsman's wages | 1,800 |
| Interest on deposits | 300 | General expenses | 700 |
| Balance c/d | 6,000 | ||
| 15,800 | 15,800 | ||
| Balance b/d | 6,000 |
Answer
Both sides of the account total RM15,800. The cash balance carried down (balance c/d) at 31 December 2023 is RM6,000.
Where marks are usually lost
Example 2: Subscriptions Account
Question
Solution plan
Subscriptions in arrears (members owe) are an asset: balance b/d on the debit side, balance c/d on the credit side. Subscriptions in advance are a liability: balance b/d on the credit side, balance c/d on the debit side. Cash received is entered on the credit side. Current-year subscriptions (to Income and Expenditure) are the balancing figure on the debit side.
| Particulars | RM | Particulars | RM |
|---|---|---|---|
| Balance b/d (arrears) | 150 | Balance b/d (in advance) | 100 |
| Balance c/d (in advance) | 250 | Bank (subscriptions received) | 6,000 |
| Income and Expenditure Account | 5,900 | Balance c/d (arrears) | 200 |
| 6,300 | 6,300 | ||
| Balance b/d (arrears) | 200 | Balance b/d (in advance) | 250 |
Answer
The current-year subscriptions transferred to the Income and Expenditure Account amount to RM5,900. Check: RM6,000 + RM200 − RM150 + RM100 − RM250 = RM5,900.
Where marks are usually lost
Example 3: Activity Trading Account (Canteen)
Question
Solution plan
A regular profit-making activity such as a canteen has its own Trading Account. Cost of sales = Opening stock + Purchases − Closing stock. Gross profit = Sales − Cost of sales. Deduct canteen wages to get the canteen net profit, which becomes INCOME in the Income and Expenditure Account.
| Particulars | RM | RM |
|---|---|---|
| Sales | 10,000 | |
| Less: Cost of sales | ||
| Opening stock | 800 | |
| Purchases | 6,500 | |
| 7,300 | ||
| Less: Closing stock | 1,200 | |
| Cost of sales | 6,100 | |
| Gross profit | 3,900 | |
| Less: Canteen workers' wages | 1,500 | |
| Canteen net profit | 2,400 |
Answer
Cost of sales is RM6,100 and canteen gross profit is RM3,900. After deducting wages of RM1,500, the canteen net profit is RM2,400, recorded as income in the Income and Expenditure Account.
Where marks are usually lost
Example 4: Income and Expenditure Account
Question
Solution plan
The Income and Expenditure Account records only the current year's revenue income and revenue expenditure (accrual basis), not capital items. Surplus = Total Income − Total Expenditure (if positive); if expenditure exceeds income, it is a deficit. The purchase of equipment (capital) is NOT included; only its depreciation is.
| Particulars | RM | RM |
|---|---|---|
| Income | ||
| Current-year subscriptions | 7,200 | |
| Canteen net profit | 2,400 | |
| Donations | 1,500 | |
| Bank interest | 200 | |
| Total Income | 11,300 | |
| Less: Expenditure | ||
| Premises rental | 3,000 | |
| Coach's salary | 4,000 | |
| Competition expenses | 1,800 | |
| Depreciation of equipment | 600 | |
| General expenses | 500 | |
| Total Expenditure | 9,900 | |
| Surplus of Income over Expenditure | 1,400 |
Answer
Total Income is RM11,300 and Total Expenditure is RM9,900. There is a surplus of income over expenditure of RM1,400, which is added to the Accumulated Fund.
Where marks are usually lost
Example 5: Computing the Accumulated Fund (Statement of Affairs)
Question
Solution plan
The Accumulated Fund is the club's equivalent of Owner's Equity, but arises from members' contributions and accumulated surpluses. Accumulated Fund = Total Assets − Total Liabilities. Subscriptions in arrears are an asset; subscriptions in advance and creditors are liabilities.
| Particulars | RM | RM |
|---|---|---|
| Assets | ||
| Photography equipment | 5,000 | |
| Stock of souvenirs | 400 | |
| Subscriptions in arrears | 150 | |
| Bank balance | 2,300 | |
| Cash | 200 | |
| Total Assets | 8,050 | |
| Less: Liabilities | ||
| Creditors | 300 | |
| Subscriptions in advance | 250 | |
| Total Liabilities | 550 | |
| Accumulated Fund | 7,500 |
Answer
Total Assets is RM8,050 and Total Liabilities is RM550. The Accumulated Fund at 1 January 2023 is RM8,050 − RM550 = RM7,500.
Where marks are usually lost
Example 6: Statement of Financial Position
Question
Solution plan
Net Assets = Total Assets − Current Liabilities, which must equal the closing Accumulated Fund. Closing Accumulated Fund = Opening Accumulated Fund + this year's Surplus. Subscriptions in arrears are a current asset; subscriptions in advance are a current liability. The 'Financed by' section replaces the Owner's Equity section.
| Particulars | RM | RM |
|---|---|---|
| Non-Current Assets | ||
| Sports equipment (net book value) | 7,400 | |
| Current Assets | ||
| Stock | 500 | |
| Subscriptions in arrears | 200 | |
| Bank | 6,000 | |
| Cash | 300 | |
| Total Current Assets | 7,000 | |
| Total Assets | 14,400 | |
| Less: Current Liabilities | ||
| Creditors | 1,000 | |
| Subscriptions in advance | 250 | |
| Total Current Liabilities | 1,250 | |
| Net Assets | 13,150 | |
| Financed by: | ||
| Accumulated Fund at 1 January 2023 | 11,750 | |
| Add: Surplus of income over expenditure | 1,400 | |
| Accumulated Fund at 31 December 2023 | 13,150 |
Answer
Total Assets is RM14,400 and Current Liabilities is RM1,250, giving Net Assets of RM13,150. The closing Accumulated Fund = RM11,750 + RM1,400 = RM13,150, which equals Net Assets.
Where marks are usually lost
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