Non-Profit Accounting

Organizations like sports clubs, charities, and youth clubs do not aim to make a profit. However, they still need to keep records to show members how their money (subscriptions) is being used.

1. Terminology Changes

One of the biggest challenges in this topic is learning the new names for familiar concepts:

Business Term	Club / Society Term
Cash Book	Receipts and Payments Account
Income Statement	Income and Expenditure Account
Profit for the Year	Surplus (Income > Expenditure)
Loss for the Year	Deficit (Expenditure > Income)
Capital	Accumulated Fund

Main Sources of Income

Membership subscriptions
Donations
Entrance fees
Fundraising events

2. The Subscriptions Account

Subscriptions are the main source of income. Because members often pay in advance or fall behind (arrears), we must adjust the cash received to find the actual income for the year.

Subscription Income = Cash Received + Closing Arrears - Opening Arrears - Closing Advance + Opening Advance.

3. The Accumulated Fund

Since there is no "Owner," we don't have a Capital account. Instead, we calculate the Accumulated Fund by finding the difference between total assets and total liabilities at the start of the period.

Accumulated Fund = Total Assets - Total Liabilities

Example – Receipts and Payments
Opening Cash Balance
5,000

Subscriptions Received
12,000

Donations Received
3,000

Less: Expenses Paid
(8,000)

Closing Balance
12,000

Example – Income and Expenditure

Subscriptions Income 12,000

Add: Donations 3,000

Less: Expenses (8,000)

Surplus for the Year 7,000

Statement of Financial Position

Instead of capital, clubs have an Accumulated Fund.

Surplus increases the accumulated fund while deficit reduces it.

Exam Tip

Students often confuse "Receipts and Payments" (which records all cash including capital items) with "Income and Expenditure" (which only records revenue items for the current year).

Practice Question

A club received subscriptions of 20,000 and donations of 5,000 during the year. Expenses amounted to 15,000.

Calculate the surplus for the year.

Quick Check 1

Which account summarises all cash transactions of a club?

Income and Expenditure Account
Receipts and Payments Account
Trading Account

Show Answer

Correct Answer: Receipts and Payments Account

Quick Check 2

1. How is "Subscriptions in Arrears" classified in the Statement of Financial Position?

A. Current Liability
B. Current Asset
C. Income

View Correct Answer

Correct Answer: B. Subscriptions in arrears is money owed to the club by members, making it a Current Asset.