Statement of Financial Position (Cambridge (CIE) IGCSE Accounting)
Revision Note
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Statement of Financial Position for Clubs & Societies
What is the layout of the statement of financial position of a club or society?
The statement of financial position for clubs and societies is prepared in a similar way to other types of businesses
The statement is split into assets and liabilities
The main difference is the capital/equity section is replaced with an accumulated fund section
What is an accumulated fund?
The capital of a club or society is referred to as the accumulated fund
This is made up of
any capital which is invested into the organisation
the accumulation of surpluses of income over expenditure over time
At the end of each year
A surplus is added to the accumulated fund
A deficit is subtracted from the accumulated fund
How do I calculate the accumulated fund?
If the accumulated fund is not given in the question, you will need to calculate it by using the accounting equation
Assets = Capital + Liabilities
Accumulated fund is the capital so the equation becomes:
Assets = Accumulated fund + Liabilities
Use the two known elements of assets and liabilities to find the accumulated fund
Accumulated fund = Assets - Liabilities
How do I use the accumulated fund to calculate surplus or deficit?
To calculate the surplus or deficit for the year:
Calculate the accumulated fund at the start of the year
Calculate the accumulated fund at the end of the year
Calculate the change in the accumulated fund
If it has increased then this is the surplus
If it has decreased then this is the deficit
Worked Example
The Chill, Chat and Knit Club offers knitting lessons to club members, as well as selling knitting supplies. It had the following assets and liabilities at 1 January 2023:
$ | |
Club furniture and fittings | 1 200 |
Inventory of knitting supplies | 300 |
Amount owed to suppliers | 120 |
Bank balance | 820 |
At 31 December 2023 the assets and liabilities had the following balances:
$ | |
Club furniture and fittings | 1 080 |
Inventory of knitting supplies | 180 |
Amount owed to suppliers | 80 |
Bank balance | 1 150 |
Calculate the surplus or deficit for The Chill, Chat and Knit Club for the year ended 31 December 2023.
Answer
Calculate the accumulated fund at the start of the year.
$ | $ | |
Assets | ||
Club furniture and fittings | 1 200 | |
Inventory of knitting supplies | 300 | |
Bank balance | 820 | 2 320 |
Less: Liabilities | ||
Amount owed to suppliers | 120 | |
Accumulated fund | 2 200 |
Calculate the accumulated fund at the end of the year.
$ | $ | |
Assets | ||
Club furniture and fittings | 1 080 | |
Inventory of knitting supplies | 180 | |
Bank balance | 1 150 | 2 410 |
Less: Liabilities | ||
Amount owed to suppliers | 80 | |
Accumulated fund | 2 330 |
The accumulated fund has increased so there has been a surplus. Find the difference between the start and the end of the year.
$2 330 - $2 200 = $130
The surplus for the year was $130
Worked Example
The Locust Football Club is an amateur football club with members of all ages.
The following information was provided at 1 April 2023.
$ | |
Equipment at cost | 16 500 |
Provision for depreciation of equipment | 3 300 |
Trade payables | 2 100 |
Subscriptions prepaid | 500 |
Accumulated fund | ? |
The following information was provided at 31 March 2024.
$ | |
Trade payables | 1 250 |
Subscriptions prepaid | 1 130 |
Subscriptions owing | 800 |
Bank balance | 4 780 |
Additional notes:
The income and expenditure account for the year ended 31 March 2024 had a surplus of $3 160
No equipment was sold or purchased during the year
Depreciation is charged on equipment using the reducing balance method at 20% per annum
Prepare the statement of financial position of Locust Football Club at 31 March 2024.
Answer
Calculate the accumulated fund at the start of the year
Calculate the total assets
Net book value of equipment ($16 500 - $3 300) = $13 200
Calculate the total liabilities
Trade payables = $2 100
Subscriptions prepaid = $500
Total liabilities = £2 100 + $500 = $2 600
Calculate the difference
$13 200 - $2 600 = $10 600
Calculate the total depreciation to date
Find the year's depreciation using the net book value of the equipment
20% × $13 200 = $2 640
Find the total depreciation to date
$3 300 + $2 640 = $5 940
Find the current net book value of the equipment
$16 500 - $5 940 = $10 560
Identify whether the subscriptions owing and prepaid are assets or liabilities
Subscriptions prepaid are current liabilities
Subscriptions owing are current assets
Prepare the statement using the required format.
The Locust Football Club Statement of Financial Position at 31 March 2024 | |||
$ | $ | $ | |
Non-current Assets | Cost | Provision for Depreciation | Net Book Value |
Equipment | 16 500 | 5 940 | 10 560 |
Current assets | |||
Other receivables | 800 | ||
Bank balance | 4 780 | 5 580 | |
Total assets | 16 140 | ||
Accumulated Fund | |||
Opening balance | 10 600 | ||
Add: Surplus for the year | 3 160 | ||
13 760 | |||
Current Liabilities | |||
Trade payables | 1 250 | ||
Subscription prepaid | 1 130 | 2 380 | |
Total liabilities | 16 140 | ||
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