Clubs & Societies (Cambridge (CIE) A Level Accounting): Revision Note

Clubs & societies

What types of businesses are clubs and societies?

• Clubs and societies are classed as non-trading organisations

• These types of businesses provide a service or facility for a fee called a subscription

• They do not operate with the sole aim of making a profit

  • The amount they gain is called a surplus

  • The amount they lose is called a deficit

What financial statements are prepared for clubs and societies?

• Clubs and societies do not always keep a full set of accounting records

• Their main accounting records tend to be

  • A receipts and payments account

    • This keeps track of the money that is paid and received

    • This is equivalent to the cash book for other businesses

  • Trading sections of statements of profit or loss for each one of any trading activities

    • Such as a café or a shop

    • These are prepared in the same way as for sole traders

  • An income and expenditure account 

    • This shows the sources of income and expenses of the organisation

    • This calculates the surplus or deficit

    • This is equivalent to the statement of profit or loss for a sole trader

  • A subscription account

    • This calculates the fees that should have been received from members during the year

  • A statement of financial position

    • This is prepared in a similar way to that of sole traders

    • This states the assets, liabilities and accumulated fund

What are the differences between clubs and societies and profit-making businesses?

Sources of finance and fundraising

What are the sources of finance for clubs and societies?

• Annual subscriptions

  • This is the main source of income

  • These are paid each year by the members

  • If the subscription is increased, then members might cancel their memberships

• Life memberships

  • These are larger amounts of money

  • However, the income is spread over a longer-term

• Donations

  • These are one-off gifts

  • General donations can be used for anything

  • Restricted donations are given for specific purposes

• Grants

  • These are funds from government bodies or other organisations

• Bank loans and overdrafts

  • These are borrowed and must be repaid, usually with interest

• Fundraising events

  • Organised events include special dinners, quiz nights, tournaments

  • Regular appeals include email campaigns and collection boxes

  • Crowdfunding is where an online platform is used to generate lots of donations from different people for a specific goal

• Trading activities

  • Clubs and societies might make profits from cafés, bars, shops, etc

How do I evaluate a source of finance or fundraising?

• Consider the cost

  • Does it need to be repaid?

  • Is interest charged?

• Consider the impact on the cash flow

  • Does it provide immediate cash?

  • Does it provide regular cash?

• Consider the impact on the accounts

  • How does it affect the income and expenditure account?

  • How does it affect the statement of financial position?

• Consider non-financial factors

  • Does it impact the quality of the membership?

  • Does it impact the reputation of the club or society?