Chapter 1

Introduction to Club
Accounting
Accounting for Club Operations
(366T or 366)

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Competencies for
Introduction to Club Accounting
1. Describe the characteristics of the club industry
and identify the major function of club
accounting.

2. Apply generally accepted accounting principles

to club situations.
3. Distinguish between cash basis and accrual
basis accounting.
4. Describe the six branches of accounting.
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(continued)

Competencies for
Introduction to Club Accounting
(continued)

5. Explain the fundamental accounting equation and

identify normal account balances for various types
of accounts.
6. Demonstrate the nine steps of the accounting
cycle.

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Club Ownership
Equity clubs are owned by the clubs
members.
Non-equity clubs are owned by developers,
corporations, or other owners.

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The Function of Club Accounting

The major role of the accounting function in a
club is to provide information to users.
External users typically rely on financial
statements.
Internal users rely on many reports, including
operating statements.

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Generally Accepted
Accounting Principles
Cost
Business entity
Continuity of the business unit
(going concern)
Unit of measurement

Objective evidence

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(continued)

Generally Accepted
Accounting Principles
(continued)

Full disclosure
Consistency

Matching
Conservatism
Materiality

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The Six Branches of Accounting

Financial accounting
Cost accounting
Managerial accounting

Tax accounting
Auditing

Accounting information systems

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Fundamental Accounting Equation

Assets = Liabilities + Members Equity

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Normal Account Balances

by Account Type
Asset: debit balance
Liability: credit balance

Members equity permanent: credit balance

Members equity revenue: credit balance

Members equity expense: debit balance

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The Accounting Cycle

1. Record transactions in journals.

2. Post amounts from journals to

ledger accounts.
3. Prepare a trial balance.
4. Prepare adjusting entries.
5. Post adjusting entries.

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(continued)

10

The Accounting Cycle

(continued)

6. Prepare an adjusted trial balance.

7. Prepare the financial statements.
8. Close the revenue and expense
accounts.
9. Prepare the post-closing trial
balance.

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