Club, Farm and Service Firms Plan
Aim:
To show how Clubs, Farms and Service Firms prepare accounts
We have done the accounts for these in the Junior Cert. They involve a Receipts and
Payments Account (to record Cash coming in and out), Income and Expenditure
Account (to work out Profit or Excess Income) and a Balance Sheet. Here I will focus
on the tricky extra stuff for the Leaving Cert
Club Accounts
1. You may remember the Accumulated Fund of a Club is the money invested
since it was set up. You may be asked to find the opening Accumulated Fund.
This is found by adding up the Assets and Liabilities, and then finding the
difference.
2. Like in the Junior Cert, you may have to make out a Trading Account eg
Bar Trading Account of Stinky Football Club for year ended 31/12/09
Sales
12,500
less Cost of Sales
Opening Stock
350
Bar Purchases
2,150
Goods Available
2,500
less Closing Stock
800
(1,700)
Bar Gross Profit
10,800
Barman’s Wages
(7,500)
Bar Net Profit
€3,300
But here we will have Bar Debtors and Creditors, which will mean that actual
sales and purchases will be different, eg debtors at the end of the year mean that we
sold more so Sales will have to rise.
3. Life Membership of a club is money invested long term like Season Tickets.
It is treated as a Long Term Liability and a bit is written off as an Income each year.
A Levy is the same.
4. Prepaids and Dues: prepaids at the beginning are added on, and prepaids at
the end are taken away. Dues are the reverse. eg Subscriptions received €14,000.
Prepaid 1/1/09 €300, Prepaid 31/12/09 €700. We add the €300 and take away the
€700 so the real subs were €13,600
5. Loan repayment: the Loan was a long term liability at the beginning of the
year. The interest paid has to be tied to the period involved.
eg Repaying a €20,000 loan on 1/7/09 along with 18 months interest amounted
to €21,800. The interest is €1,800 or €100 a month. So €1,200 interest was a liability
at the beginning of the year and €600 was an expenditure of this year. The loan itself
was a liability at the beginning of the year.
Service Firms
Very similar to Club accounts except the Income and Expenditure is now called a
Profit and Loss account as this type of organisation is commercial, meaning it aims to
make a profit, not provide a social service like a Club.
Farm Accounts
You may have to do an Analysed Receipts Account but certainly an Enterprise
Analysis account to find the gross profit for each area of operations eg Sheep, Dairy,
etc and then a Profit and Loss account to find Net Profit, and a Balance Sheet.
The following are the tricky issues:
1. Drawings: when the owner uses produce, cash, etc for their own use, this is
deducted from the Owners Capital and Debited in the Enterprise Analysis account
2. Grants: long term grants (eg for buying a machine) are part of financed by and
annual ones (eg set aside payments) are incomes for the Profit and Loss