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CLUB/SERVI

CE/
INCOMPLET

CLUB ACCOUNTS

A club is not a business.


Its raison d'tre is not profit.
It does not pay CPT on its profits.
Different set of words used to flag this difference.
Cash Book
Receipts & Payments a/c
P&L
Income & Expenditure a/c
Profit
Excess of Income
Capital
Accumulated Fund

CLUB ACCOUNTS TRY THIS APPROACH ?


o
o

Get a set of accounts from some local club


Simple Rec & Pay a/c. Rule no thought over
whether something should have been paid or not
If it was paid it goes into Payments. If it was
received it goes with Receipts
Point out:
a bad year
but purchase Equip
Competition profit
Sponsorship

A Receipts & Payments a/c does not give clear picture of club finances.

Same Question utilising Income & Expenditure a/c


Note: A loss is now a
profit!
More and clearer
information for
members.
Talk about sponsorship,
depreciation, subs
due/prepaid, expenses
due/prepaid

Now

move on to a simple I & E

Next we Introduce the Bar Trading Account


Bar Stock same as all Trading Accounts
Bar Debtors and Creditors : two methods
1.
2.

Control A/c [ Ord. Level must use this in Incomplete]


Sales = Receipts + what we haven't received yet

Purchases = Payment + due

Next we tackle Accumulated Fund.


You can do this as a list of assets and liabilities [ layout
not important]
Now we can tackle a full 100 mark Ordinary Level
Question. Example Q6 2009 Pearses Football Club

Next we move on to Higher level 60 marks [2008 Q3 ]


And then onto Higher level 100 [Q6 2011]
Things to watch out for :
Life Membership is liability and is written off into Income.
Levy Reserve Fund is a liability.
If a loan is repaid during the year( ie its in R&P) then it
was owed @ start of year a liability.
Repayment of loan 30000 on 31/9/10 with 15 months
interest.
33960. 3960 is 15 months interest broken:2376 [ 9 months-this year] Expense in I&E
1584 [ 6 months last year ] liability in Accum. Fund
Income from 4% Investments 1500 (in R&P) and Inv. Int
Due 31/12/2010 500 Inv. Int 2000 as income in I&E
but also Investments 50000 in Assets in Accum Fund.
Levy of 100 on 8 members for 2008 included in subs rec.
Levy due (Asset) in Accum. Fund.

SERVICE FIRMS

Very similar to Club Account


Important Differences; [ eg Q6 2009 ]
1.

2.

3.

4.

Asked to calculate Reserves @ beginning of year.


This is added to Net Profit at end of Profit&Loss
[not in BS]
All Fixed Assets have 3 years accumulated
depreciation on 1/1/09. These are subtracted from
Assets in calculation of Reserves.
Clients fees Amount received 340,000 + Fees due
31/12/2009 500 + Advance deposits 1/1/2009 4,000
Less fees prepaid 31/12/2009 5,000 = 339,500 =
Income
The R/D cheque must be added to clients fees due
and subtracted again to show Bad Debt.

INCOMPLETE RECORDS
Three types:
1.Control Accounts [ Q7 2009 ]
2.Net Worth [ Q4 2011 - - not asked for P&L]
3.Ratios
Control Account Top-Down
oFind the Opening Capital [ or Goodwill] by doing a list of Assets &
Liabilities at start of year.
oDo Notes/Workings as follows: Find Cash Sales Do a Cash a/c [ NB Cash Drawings]
Find Credit Sales- Do Debtors Control a/c
Find Credit Purchases Do Creditors Control a/c [ NB
Stock Drawings ]
Find Closing Bank figure Do Bank a/c
Find Drawings figure make a list of Drawings
For each expense
Adjust for due/prepaid
- Adjust for Drawings
oPrepare Trading, Profit and loss & Balance Sheet.

INCOMPLETE RECORDS
Net Worth/Mark up-margin/Bottom-Up
Find the Opening Capital [ or Goodwill] by doing a list of
Assets and Liabilities at start of year.
Do Notes/Workings as follows: Find Drawings figure make a list of Drawings
For each expense Adjust for due/prepaid
Adjust for Drawings
Complete the end-of-year Balance Sheet.
[The Financed by section will contain the missing figure
for Net Profit] [Capital Employed Long Term Liability
Capital Capital Introduced + Drawings = Profit]
Prepare a Trading, Profit & Loss a/c in as much detail as
possible [the figures for Gross Profit, Purchases & Sales
are the last to go in] [Margin is profit as a % of sales;
Mark-up is profit as a % of Cost of sales]

INCOMPLETE RECORDS
Watch out for:
1.Dividends (lodged). The business has not got any
Investments the dividends are paid to the owner in
his/her private capacity Capital Introduced Add to
Capital in closing Balance Sheet.
2.Investment Fund Interest 36 add to Gross Profit and
include in Investment Fund In Balance Sheet.
3.Borrowed 120,000... Paid back in 20 equal
instalments ... The first instalment due on 1/2/2009. In
Balance sheet as at 31/12/08 Loan Instalment due
12000 in Current Liabilities and in Financed by Long
Term Loan 108000.
4.College fees attributed to an employee expense in
P&L: ....attributed to a child drawings

INCOMPLETE RECORDS

Ratio Type Q not examined in ages. Do @ end


of Ratios.

THEORY

Answer the question that is asked! The answer is


in the question.
Incomplete has had the same theory question for
years!
Club & Service:
Always

quantify your comments.


Do not mix assets with liabilities in one sentence
If asked to give advice give financial advice

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