Accounting for clubs and societies

1. Accounting for clubs and societies

2. Learning outcomes • Understand the accounting requirements of a club and society. • Prepare a Subscription accounts • Prepare a Trading accounts (only if there is a restaurant or canteen). • Prepare a Receipts and Payments accounts. • Prepare a Income and Expenditure accounts. • Prepare a Balance Sheet.

3. Introduction Societies Act1966 • Definition- Clubs and societies are non-business entity registered under the Societies Act 1966. • The purpose is not for profit but to promote and cater for the members’ interests and welfare. • Also provide service to clubs’ members. • E.g. sports clubs, social clubs, staff associations.

4. Cont. • It is usually small in nature and the financial affairs were given to and elected official known as treasurer. • Functions of treasurer: • To maintain records of the club’s financial transactions. • To prepare an annual financial reports to be presented to the members at an AGM.

5. Comparison between businesses and clubs and societies

6. Subscription accounts • Subscriptions are paid by members as charges for using the facilities of a club or society for a particular period of time (usually in yearly basis). • Subscriptions fees: • Entrance fee • Annual fee • Tournament fee • In order to post it to the Income and Expenditure accounts, adjustments have to be made to the subscription. That is, subscription only pertaining to that particular year is recorded in I/E accounts.

7. Cont • Illustration 1: • A golf club has 150 members. Annual subscription fee is RM100 for each member. For the year ended 31 December 2010, the club received RM5,000 for subscription fees from members. This amount includes RM300 received in 2011.

8. Trading accounts • It is necessary if the club runs trading operation such as canteen. • The profit/loss obtained from the trading is posted to Income & Expenditure Account. • Relevant information: • Opening and closing stocks • Purchases (Cash and credit) • Sales (Cash and credit) • Expenses for operating the trade (e.g. canteen) • Illustration 2:

9. Receipts and payments account • Is a summary of the cashbook for the period under review. • A summary of cash and cheques received and paid. • It does not use accrual basis in accounting. • No opening and closing balance. • Receipts are recorded at debit side and payments are recorded at credit side of the account. • If at the end of the accounting period, balances in debit side indicate as cash in hand (B/S) and balances in credit side indicate overdraft (B/S).

10. cont • R/P accounts maybe suitable for very small clubs and societies with mainly have cash and bank balances. • Thus, for larger clubs and societies usually prepare and income and expenditure accounts.

11. Income and expenditure accounts • The preparation of the account is similar to Profit and Loss Accounts for businesses. • Accrual basis – year end adjustments are necessary. • Surplus = Profit • Deficit = Loss

12. Income and expenditure accounts Income • Members’ fees • Tournaments’ fees • Collection from social functions • Rental of sports equipment and lockers • Donations and contributions • Profit from sale of refreshments

13. Cont. Expenditure • Rental of club house • Purchases of newspapers and magazines • Purchases of sports equipment • Honorarium • Workshops and trainings • Visits • Expenses for meetings

14. Balance sheet • To record all assets, liabilities and accumulated funds. • The presentation is similar as BS for businesses except for the owners’ equity. • Owners’ equity = Accumulated fund • Assets = Accumulated funds + Liabilities • Exercises