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:
[Link] Accounts [ Q7 2009 ]
[Link] Worth [ Q4 2011 - - not asked for P&L]
[Link]
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:
[Link] (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.
[Link] Fund Interest 36 add to Gross Profit and
include in Investment Fund In Balance Sheet.
[Link] 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.
[Link] 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