ZIMSEC O-Level Principles of Accounting (4051)

Clubs and Societies: notes

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Not for profit organisations

Club or society: a group that exists to serve its members, not to earn profit for owners.
Surplus: income greater than expenditure. It stays with the club and is not called profit.
Deficit: expenditure greater than income, shown as a loss.
Example: Income $800 minus expenditure $650 gives a surplus of $150.

Meaning: a record of all cash and bank money received and paid in the period.
Includes capital items: buying equipment for cash appears here because cash actually moved.
Balances: opening balance plus receipts minus payments equals closing balance.
Example: Opening balance $100, subscriptions received $400, rent paid $250 gives closing balance $250.

Meaning: a record of income earned and expenditure incurred in the period, whether or not cash changed hands.
Excludes: capital purchases such as equipment, which are assets, not expenses.
Subscriptions in arrears: unpaid subscriptions for the year count as income and are an asset on the balance sheet.
Subscriptions in advance: money received for next year is not this year's income and is a liability.
Example: Subscriptions due $500, cash received $420, so $80 is in arrears and income is $500.

Accumulated fund: the members' equity, the club's version of capital. Opening fund plus surplus equals closing fund.
Special activities: events such as a dance or raffle. Profit equals proceeds minus cost, shown in a separate account and transferred to income and expenditure.
Club balance sheet: lists assets (cash, equipment, arrears) and liabilities (subscriptions in advance, creditors). The difference is the accumulated fund.
Example: Assets $900 minus liabilities $200 gives an accumulated fund of $700.