26 October 2023

Statement of financial position

There is no capital in the SOFP of clubs and societies because members do not invest money in the same
way the proprietor does. Members are not entitled to make any drawings from surplus made by the
club. The surplus accumulates to form a capital fund known as ACCUMULATED FUND. A deficit reduces
the accumulated fund. Accumulated fund replaces capital. It is pepared in the same way the SOFP of a
trading business is prepared.

Where a list of assets and liabilities is given to calculate the accumulated fund we use the accounting
equation:

Accumulated Fund= Assets – Liabilities

Subscriptions

All subscriptions received are recorded in the receipts and payments account but the Income and
Expenditure account shows the amount of subscriptions relating to the current financial year.
Subscriptions may be owing (current asset) or prepaid (current liability) at the beginning and or end of
the year. To calculate subscriptions for the current period a subscriptions account is prepared as follows:

Subscriptions account

Date Details $ Date Details $

2018 2018
Jan 1 Balance b/d(owing b/d) X Jan 1 Balance b/d (prepaid b/d) X
Dec 31 Bank (from receipts and Dec 31 Income and expenditure X
payments account) X Balance c/d (owing c/d) X
Balance c/d (prepaid c/d) X
XX XX
2019 2019
Jan 1 Balance b/d (prepaid b/d) X Jan 1 X

Calculation of sales and purchases

To calculate sales and purchases we use the same principles applied for a business with incomplete i.e
prepare a trade payables account to calculate credit purchases and a trade receivables account to
calculate credit sales before preparing the income and expenditure account.