UKAF1083 FINANCIAL
ACCOUTING 11
Lecturer Name: A.Jeya Santhini
Email : jeyasanthini@utar.edu.my
6/18/2023
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Lecture1
Clubs and societies
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Teaching objectives
Students will learn about:
 The differences between accounting for notfor-profit organisations and profit organisations
 Preparing receipts and payment accounts
 Preparing income and expenditure accounts
 Calculating profits/losses from special
activities and incorporating them into the
financial reports.
 Making appropriate entries relating to
subscriptions, membership and donation
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Learning outcomes
At the end of this lecture, students should be
able to:
 Explain the difference between accounting for
not-for-profit organisation vs profit organisation
 Prepare receipts and payment accounts
 Prepare income and expenditure accounts
 Calculate profits/losses from special activities
and incorporating them into the financial
reports
 Make appropriate entries relating to
subscriptions, membership and donation
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Not-for-profit organisations
E.g. charities, clubs, associations,
societies
 Do not exist with the primary purpose of
making a profit.
 Such entities normally exist with the
primary purpose of furthering the
interests of its members

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Inappropriate to prepare trading and
profit and loss accounts (income
statement)
 They prepare “receipts and payments
accounts” and “income and expenditure
accounts”.

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Terminology
Profit-making term.....
Becomes.....
Owners
Members
Capital
Accumulated fund
Profit
Loss
Surplus* (of Income over
expenditure)
Deficit
Profit & Loss a/c
Income & Expenditure a/c
Cash Book
Receipts & Payments a/c
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Receipts and payments account – a summary
account of the cash book
XYZ Clubhouse
Receipts and payments account for the year ended 31 Dec 2019
Receipts
Bank bal at 1.1.19
Subscriptions received
Rent received
RM Payments
2,360 Groundman’s wages
7,280
11,480 Sports ground rental
2,960
1,160 Committee expenses
Printing and stationery
Bal c/d
15,000
6/18/2023
RM
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580
330
3,850
15,000
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Income and expenditure accounts
The equivalent of income statement for
business entities
 Follows the same rules as income
statement
 Profit or loss is termed as surplus or
deficit
 Surplus is not meant to be kept, but used
to pay for the main purpose of the
organisation
 Capital = accumulated fund

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Income and expenditure accounts
Example: a club may organise a party for
the members, who pay for the party. Any
surplus/profit from the party would be
used to pay for the club’s operational
costs.
 For the party, an income statement is
drawn up, and the profit transferred to
the income and expenditure account of
the club.

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Solution overview
Receipts & Payments
INCOME
EXPENDITURE
Subscriptions
Admin exps
Bar profit/loss
Upkeeps
Donation
Transport
Depreciations
SOFP
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Example (FW p.445)
Sg Long Futsal club
Receipts and payments account for the year ended 31 Dec 2019
Receipts
RM Payments
Bank bal at 1.1.18
524 Bar purchases
Wages – groundman
Subscriptions received:
2018 (arrears)
2019
2020 (in advance)
Bar sales
Donations received
1,400
- Barman
14,350 Bar expenses
1,200 Repairs to stands
61,280 Ground upkeep
800 Secretary’s expenses
Transport costs
Bal c/d
79,554
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RM
38,620
19,939
8,624
234
740
1,829
938
2,420
6,210
79,554
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Additional information
inventory in bar at cost
Owing to bar suppliers
Bar expenses owing
Transport costs owing
2018
2019
RM
4,496
3,294
RM
5,558
4,340
225
-
336
265
The
land and futsal stands were valued at 31 Dec 2018 at: land
RM40,000, stands RM20,000; the stands to be depreciated by 10%p.a.
The equipment at 31 Dec 2018 at valuation RM2,500, and to be
depreciated at 20% p.a.
Subscriptions owing by members amounted to RM1,400 on 31 Dec
2018, and RM1,750 on 31 Dec 2019.
Required: prepare income and expenditure and SOFP at 31 Dec 2019.
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Step 1: work out accumulated fund
at 31 Dec 2013
Statement of affairs at 31 Dec 2018
Land
40,000 Creditors
Stands
20,000 Bar exps accrued
225
Equipment
2,500 Accumulated fund
65,401
inventory in bar
4,496
Debtors - subscribers
1,400
Bank
524
68,920
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3,294
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68,920
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Step 2: prepare the bar trading account
Cash
Bal c/d
Bar creditors account
38,620 Bal b/d
4,340 Trading a/c
42,960
3,294
39,666
42,960
Cash
Bal c/d
Bar expenses accrued
234 Bal b/d
336 Trading a/c
570
225
345
570
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Sg Long Futsal Club
Bar trading account for the year ended 31 Dec 19
Sales
61,280
Less cost of goods sold:
inventory at 1.1.19
4,496
purchases
39,666
44,162
Less closing inventory at 31.12.19
(5,558)
(38,604)
Gross profit
22,676
Less: bar expenses
345
barman’s wages
8,624
Net profit to I.E. account
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(8,969)
13,707
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Step 3: preparing income and expenditure
account
Subscriptions received
Bal b/d
Inc & Exp acc
Bal (advance) c/d
1,400 Cash 2018
16,100
2019
14,350
1,200
2020
1,200
Bal (owing) c/d
1,750
18,700
Cash
Accrued c/d
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1,400
Transport costs
2,420 Inc & Exp acc
265
2,685
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18,700
2,685
2,685
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Income and expenditure account for the yr ended 31 Dec 19
Income
RM
RM
Subscriptions for 2019
16,100
Profit from bar
13,707
Donations received
800
30,607
Less expenditure:
Wages – groundsman & assistance
Repairs to stand
19,939
740
Ground upkeep
1,829
Secretary’s expenses
938
Transport costs
2,685
Depreciation – stands
2,000
equipment
500
(28,631)
Surplus
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1,976
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Sg Long Futsal Club
SOFP as at 31 Dec 2019
RM
Non Current Assets
Land at valuation
RM
40,000
Futsal stands at valuation
20,000
Less depreciation
(2,000)
Equipment at valuation
2,500
Less depreciation
(500)
18,000
2,000
60,000
Current assets
inventory – bar
5,558
Subscription debtors
1,750
Cash at bank
6,210
Total
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13,518
73,518
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Sg Long Futsal Club
SOFP as at 31 Dec 2019 (cont.)
RM
RM
Member’s Capital and liabilities
Accumulated fund at 1.1.19
65,401
Surplus
1,976
Balance as at 31.12.2019
67,377
current liabilities:
creditors for bar supplies
4,340
bar expense owing
336
transport costs owing
265
subscriptions rec. in advance
Total member’s capital and liabilities
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1,200
6,141
73,518
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Subscriptions accrued and
subscriptions received in advance







A dance club charges annual fee of RM20 per
member.
On 1.1.19, 18 members had not paid their
subscriptions for the year 2018
In Dec 2018, 4 members paid RM80 for the year 2019
During the year 2019, it received RM7,420 for
subscriptions, made up as follows:
2018: RM360, 2019: RM6,920, 2020: RM140
At 31 Dec 2019, 11 members had not paid their 2019
subscriptions.
Required: prepare the subscriptions for 2019
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Subscriptions (Income Account)
2019
RM 2019
Jan 1 owing b/d
18 xRM 20
360 Jan 1 Prepaid b/d
4xRM20
Dec 31 Inc & expd.
Dec 31 Prepaid c/d
7,220 Dec 31 Bank
140 Dec 31 Owing c/d
11x RM20
7,720
2020
Jan 1 Owing b/d
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RM
80
7,420
220
7,720
2020
220 Jan 1 Prepaid b/d
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140
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Life membership

Life membership fees should not be treated as
income solely in one year.
 It has to be spread over a number of years.
 It is important to realise that the income from
this payment is designed to 'cover' many
years.
 Under the accruals concept, we cannot credit
the I & E a/c (for any one year) with the full
amount.
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Life membership – con’t

All life membership fees are to be credited to a
“life membership account” and transfers to be
made from that account to the I & E a/c
annually at a pre-determined rate.
 The pre-determined rate will depend on factors
such as the average age upon membership,
the life expectancy of members, and the life
membership fee itself.
 Life membership subscription fund account is
shown in SOFP just below the accumulated
accumulated fund fees
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Donations and entrance fees
Donations are to be treated as income in
the year they are received. However, it
always depends on the club policy
whether to capitalized or to treat as an
income.
 Entrance fees/transfer fees are normally
treated as income in the year they are
received.

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Short quiz
What is the purpose of receipts and
payments?
1.
A.
B.
C.
D.
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To show the surplus or deficit of the period
To show the amount of actual cash paid
out and received
To work out the accumulated funds for the
period
So that a balance sheet could be
extracted from it
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Short quiz
2. Which of the following is not considered
an income of a futsal club?
A.
B.
C.
D.
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Subscription fees
Bar profit
donation
Stand maintenance
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Short quiz
3. Which one of the following is least likely
to be an expenditure of a futsal club?
A.
B.
C.
D.
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Director’s fee
Groundman wage
Depreciation of sports equipment
Stand repairs
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Short quiz
4. Which of the following would you use to
work out the accumulated funds if it is
not given?
A.
B.
C.
D.
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Receipts and payments
Income and expenditure
Trading, profit and loss account
Statement of affairs
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Short quiz
5. Briefly explain how life membership fees
of a club should be treated in the
accounts (i.e. in the income and
expenditure statement and balance
sheet).
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SHORT QUIZ

A club’s record provide the following information
Year 2015
RM
Annual subscription ordinary received in the year
(Included in above RM4,000 was subscription ordinary in
advance amounting RM50)
4,000
Balance on life subs account at beginning of the year
500
Life subs received on March 2015 in the year
100
(500+100)/5=120
The club’s policy is to credit life subscription to the Income and
Expenditure acc over five years, in equal amounts. How much
should be credited to the Income and expenditure Acc for the
subscription for the year?
A. RM4050
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B. RM4150
C. RM4070
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D. RM4170
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SHORT QUIZ
A club has 200 members paying an annual subscription
of RM50. It provided the following information.
 Subscription received
RM9,800
 Depreciation
850
 Other running cost
8,280
Whats was the surplus for the year?
A.RM400 B. RM600 C. RM670
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D. RM870
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SHORT QUIZ
What is the appropriate accounting treatment for donation if donation is meant to
(i)Charge to Income and Expenditure
(ii)Capitalised
Answer
(i) Income & expenditure account for year ended….
Subscription fees
xxx
Donation
xxx
(ii)Donation captured under SOFP
 Extract of SOFP
 Accumulated fund xxx
 Income and expen xxx
xxxx
 Donation fund
xxx
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