5.4 Clubs and Societies: Preparing Accounts for Revenue-Generating Activities

This section focuses on preparing financial accounts for clubs and societies that generate revenue through activities like refreshments and subscriptions. We will cover the key elements involved in recording and summarizing these transactions.

Understanding Revenue-Generating Activities

Clubs and societies often engage in activities to raise funds. Common examples include:

• Selling refreshments (e.g., at meetings, events)
• Charging membership subscriptions
• Organizing fundraising events
• Running social events with ticket sales

Key Accounts to Consider

When preparing accounts for a club or society, the following accounts are typically used:

• Cash/Bank Account: To record all cash inflows and outflows.
• Revenue Account (e.g., Refreshment Sales, Subscription Income): To record income generated from activities.
• Expenses Account (e.g., Refreshment Costs, Printing Costs, Venue Hire): To record costs incurred in running the club or society.
• Capital Account (Equity): To show the financial position of the club or society.

Recording Revenue from Refreshments

When the club sells refreshments, the following journal entry is made:

Debit: Cash/Bank (Increase in cash)
Credit: Refreshment Sales (Increase in revenue)

Example:

If the club sells refreshments for £15 and receives cash, the entry would be:

Date	Account Name	Debit (£)	Credit (£)
2024-03-15	Cash/Bank	15
2024-03-15	Refreshment Sales		15

Recording Income from Subscriptions

When members pay their subscriptions, the following journal entry is made:

Debit: Cash/Bank (Increase in cash)
Credit: Subscription Income (Increase in revenue)

Example:

If 10 members pay a total of £100 in subscriptions, the entry would be:

Date	Account Name	Debit (£)	Credit (£)
2024-03-15	Cash/Bank	100
2024-03-15	Subscription Income		100

Preparing a Simple Income Statement

An income statement summarizes the revenue and expenses of a club or society over a period.

Income Statement (for the period ending 2024-03-31)

Item	Amount (£)
Refreshment Sales	$250
Subscription Income	$150
Total Revenue	$400
Refreshment Costs	$50
Printing Costs	$20
Venue Hire	$30
Total Expenses	$100
Net Income	$300

Preparing a Simple Profit and Loss Account

The Profit and Loss Account is another term for the Income Statement.

Important Considerations

• Accurate Record Keeping: Maintain detailed records of all income and expenses.
• Reconciliation: Regularly reconcile cash balances with bank statements.
• Budgeting: Prepare a budget to forecast income and expenses.
• Disbursements: Ensure proper authorization and documentation for all payments.