Not-for-profit accounts

FA – L1 – Q90 – Preparation of not-for-profit accounts

Explain the IFRS Foundation and list two objectives.

Question

(a) What is the International Financial Reporting Standard (IFRS) foundation? Mention two (2) objectives of the foundation.

(b)(i) The following information relate to “Hope Rising” Youth Club for the accounting period of 20X9.

Subscription owing for 20X9	GH₵
Payable for end of year party	3,000
Payables for repairs – equipment	2,000
Payables for repairs – vehicle	1,000

Payments	GH₵
Vehicle running expenses	6,000
Electricity expenses	3,000
End of year party expenses	10,000
Salaries and wages	25,000
Printing and stationery	3,000
Cleaning expenses	6,000

Receipts	GH₵
Car park renting	10,000
Sales of party tickets	6,000
Donation from friends of the club	15,000
Subscription received: 20X8	6,000
Subscription received: 20X9	30,000

Additional Information:
(i) Cash in hand as at 01/01/20X9: GH₵18,000
(ii) Subscription owing as at 01/01/20X9: GH₵8,000
(iii) Any subscription outstanding is written off in the following year if it is not paid.

You are required to prepare:
(i) Receipts and payments account for the year ended 31st December, 20X9.

(ii) Subscription account

(iii) Income and expenditure for the year ended 31st December, 20X9

Answer

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Tags: Financial Statements, Income and expenditure, Not-for-profit accounts
Level: Level 1

Topic: Preparation of not-for-profit accounts

FA – L1 – Q88 – Preparation of not-for-profit accounts

Prepare income and expenditure account and statement of financial position for XY Healthcare Co Sports and Social Club for 20X9, including subscriptions and inventory adjustments.

Question

You have agreed to take over the role of bookkeeper for the XY Healthcare Co Sports and Social Club.
The summarised statement of financial position on 31 December 20X8 as prepared by the previous bookkeeper contained the following items.

Assets	GH₵
Heating oil for clubhouse	700
Shop and cafe inventories	5,000
New sportswear, for sale, at cost	4,000
Used sportswear, for hire, at valuation	1,000
Equipment for groundsman
Cost	10,000
Depreciation	(2,000)
Subscriptions due	200
Bank
Current account	800
Deposit account	20,000
Capital and liabilities	GH₵
Accumulated fund	29,200
Payables
Shop and cafe inventories	600
Sportswear	900

The bank account summary for the year to 31 December 20X9 contained the following items.

Receipts	GH₵
Subscriptions	11,000
Bankings
Shop and cafe	10,000
Sale of sportswear	6,000
Hire of sportswear	4,500
Interest on deposit account	400

Payments	GH₵
Rent and repairs of clubhouse	6,000
Heating oil	4,000
Sportswear	4,500
Grounds person	9,000
Shop and cafe purchases	9,000
Transfer to deposit account	3,000

You discover that the subscriptions due figure as at 31 December 20X8 was arrived at as follows.

Subscriptions due	GH₵
Subscriptions unpaid for 20X7	10
Subscriptions unpaid for 20X8	230
Subscriptions paid for 20X9	(40)

Corresponding figures at 31 December 20X9 are:

Subscriptions due	GH₵
Subscriptions unpaid for 20X7	10
Subscriptions unpaid for 20X8	20
Subscriptions unpaid for 20X9	90
Subscriptions paid for 20X0	(200)

Subscriptions due for more than 12 months should be written off with effect from 1 January 20X9.

Asset balances at 31 December 20X9 include:

Assets	GH₵
Heating oil for clubhouse	700
Shop and cafe inventories	5,000
New sportswear, for sale, at cost	4,000
Used sportswear, for hire, at valuation	1,000
Closing payables at 31 December 20X9 are for:
Shop and cafe inventories	800
Sportswear	450
Heating oil for clubhouse	200

Two thirds of the sportswear purchases made in 20X9 had been added to inventory of new sportswear in the figures given in the list of assets above, and one third had been added directly to the inventory of used sportswear for hire.
Half of the resulting ‘new sportswear for sale at cost’ at 31 December 20X9 is actually over two years old. You decide, with effect from 31 December 20X9, to transfer these older items into the inventory of used sportswear, at a valuation of 25% of their original cost.
No cash balances are held at 31 December 20X8 or 31 December 20X9. The equipment for the grounds person is to be depreciated at 10% per annum, on cost.

Required:
Prepare the income and expenditure account and statement of financial position for the XY Healthcare Co Sports and Social Club for 20X9.

Answer

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Topic: Preparation of not-for-profit accounts

FA – L1 – Q87 – Preparation of not-for-profit accounts

Prepare income and expenditure account and statement of financial position for Sankofa Hockey Club for the year ended 30 June 20Y0 using provided cash transactions and asset details.

Question

The Sankofa Hockey Club does not have any formal accounting records but the following information is available.

(1) The payments that have been made by the club for the year ending 30 June 20Y0 are as follows:

Description	GH¢(000)
Purchase of second hand table tennis table	250
Rent	600
Tea stall purchases	980
Annual fair expenses	1,450
Outings expenses	370
Prizes for whist evenings	190
Repairs to snooker table	110
Refreshments at social evenings	180

(2) The club’s income, apart from annual subscriptions, is as follows:

Description	GH¢(000)
Contributions to outings	300
Takings at the annual fair	2,150

The club also runs a tea stall in the community park every Sunday in the summer months. This sells tea and coffee, cakes, biscuits, and ice creams, etc. The profit margin on the tea stall is normally 20% of selling price.

(3) All the club’s transactions are in cash, but if there are any surplus funds, they are banked in a local bank account. The balance on the bank account was GH¢30,000 at 1 July 20X9.

(4) The club has an annual subscription rate of GH¢20,000 per annum per person or GH¢50,000 per annum for a family membership. Members are asked to pay their subscription in July at the beginning of the club’s accounting year.

There are 10 family members of the club. Of these, two paid their 20Y0 subscription in June 20X9, and all the rest were received before 30 June 20Y0.

No individual members had paid their 20Y0 subscriptions in advance, but at 30 June 20Y0, four members still owed their subscriptions. They had been contacted, and all four had promised to pay at the next evening social event. There are in total 80 individual members.

(5) The club has the following other assets and liabilities:

Description	1 July 20X9 (GH¢(000))	30 June 20Y0 (GH¢(000))
Sports equipment	2,560	–
Inventory for the tea stall	110	190
Payables for the tea purchases	100	–
Prepayment of rent	50	50

(6) The sports equipment is all depreciated at 20% per annum on carrying amount on the basis of the equipment held at 30 June each year.

(7) The old table tennis table was sold during the year for GH¢40,000. Its value as recorded by the club at 30 June 20X9 was GH¢30,000.

You are required to prepare an income and expenditure account for the year ended 30 June 20Y0 and a statement of financial position at that date.

Answer

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Tags: Cash Transactions, Depreciation, Income and expenditure account, Not-for-profit accounts, Statement of Financial Position, Subscriptions, Tea stall profit
Level: Level 1

Topic: Preparation of not-for-profit accounts

FA – L1 – Q85 – Preparation of not-for-profit accounts

Calculate subscriptions due and prepare receipts and payments account for Afrika Hospital Sports Club for 20X9.

Question

The following balances have been obtained from the books of Afrika Hospital Sports Club:

	June 30, 20X8	June 30, 20X9
Cash	1,204,800	1,586,500

The following information is also available in respect of the year ended June 30, 20X9:
Payments during the year

	GH¢
Building	753,000
Sports Equipment	442,800
Investments	436,000

There were also a series of general expenses paid.
Membership
The club had 600 members on June 30, 20X9. No new members were admitted during the year but 10 members left the club on January 1, 20X9. Subscription per member is GH¢ 500 per month.
Some members pay subscriptions in advance but others pay late sometimes. The amounts paid in advance and amounts in arrears at each year end were as follows:

	June 30, 20X8	June 30, 20X9
Advance subscription	86,000	92,000
Subscriptions receivable	326,000	357,000

Required:
(a) Calculate the total subscriptions due from the members for the year ending June 30 20X9.
Use a T account (subscriptions account) to calculate the cash received from members and then complete a receipts and payments account identifying the cash paid as general expenses as a balancing figure.

(b) Afrika Hospital is a public sector entity. Identify what you expect its principal aims to be, and explain the importance of financial reporting in this sector, with reference to groups that may use the hospital’s financial reports.

Answer

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Tags: Financial Reporting, Not-for-profit accounts, Objectives, Public Sector, Stakeholders
Level: Level 1

Topic: Preparation of not-for-profit accounts

FA – L1 – Q84 – Preparation of not-for-profit accounts

Prepare receipts and payments and income and expenditure accounts for Unity Sports Club for the year ended June 30, 20X9, using provided balances and membership data.

Question

The following balances have been obtained from the books of Unity Sports Club:

	June 30, 20X8	June 30, 20X9
Building	6,024,000	6,024,000
Furniture	3,012,000	3,012,000
Books	1,129,500	1,129,500
Sports equipment	1,807,200	1,807,200
Investments
Advance subscription	86,000	92,000
Prepaid expenses	122,000	176,000
Expenses payable	186,900	207,600
Subscriptions receivable	326,000	357,000
Cash	1,204,800	1,586,500

The following information is also available in respect of the year ended June 30, 20X9:
(i) Depreciation for the year has been credited directly to the asset accounts. The rates of depreciation are as follows:

Building: 5%
Furniture and books: 10%
Sports equipment: 20%

(ii) The club had 600 members on June 30, 20X9. No fresh members were admitted during the year but 10 members left the club on January 1, 20X9. Subscription per member is GH¢ 500 per month.

Required:
(a) Summary of receipts and payments made during the year ended June 30, 20X9.
(b) Income and expenditure account for the year ended June 30, 20X9.

Answer

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Tags: Club accounting, Depreciation, Financial Statements, Income and expenditure, Not-for-profit accounts, Receipts and payments, Subscriptions
Level: Level 1

Topic: Preparation of not-for-profit accounts

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FA – L1 – Q90 – Preparation of not-for-profit accounts

Explain the IFRS Foundation and list two objectives.

FA – L1 – Q88 – Preparation of not-for-profit accounts

Prepare income and expenditure account and statement of financial position for XY Healthcare Co Sports and Social Club for 20X9, including subscriptions and inventory adjustments.

FA – L1 – Q87 – Preparation of not-for-profit accounts

Prepare income and expenditure account and statement of financial position for Sankofa Hockey Club for the year ended 30 June 20Y0 using provided cash transactions and asset details.

FA – L1 – Q85 – Preparation of not-for-profit accounts

Calculate subscriptions due and prepare receipts and payments account for Afrika Hospital Sports Club for 20X9.

FA – L1 – Q84 – Preparation of not-for-profit accounts

Prepare receipts and payments and income and expenditure accounts for Unity Sports Club for the year ended June 30, 20X9, using provided balances and membership data.

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FA – L1 – Q90 – Preparation of not-for-profit accounts

Explain the IFRS Foundation and list two objectives.

You're reporting an error for "FA – L1 – Q90 – Preparation of not-for-profit accounts"

FA – L1 – Q88 – Preparation of not-for-profit accounts

Prepare income and expenditure account and statement of financial position for XY Healthcare Co Sports and Social Club for 20X9, including subscriptions and inventory adjustments.

You're reporting an error for "FA – L1 – Q88 – Preparation of not-for-profit accounts"

FA – L1 – Q87 – Preparation of not-for-profit accounts

Prepare income and expenditure account and statement of financial position for Sankofa Hockey Club for the year ended 30 June 20Y0 using provided cash transactions and asset details.

You're reporting an error for "FA – L1 – Q87 – Preparation of not-for-profit accounts"

FA – L1 – Q85 – Preparation of not-for-profit accounts

Calculate subscriptions due and prepare receipts and payments account for Afrika Hospital Sports Club for 20X9.

You're reporting an error for "FA – L1 – Q85 – Preparation of not-for-profit accounts"

FA – L1 – Q84 – Preparation of not-for-profit accounts

Prepare receipts and payments and income and expenditure accounts for Unity Sports Club for the year ended June 30, 20X9, using provided balances and membership data.

You're reporting an error for "FA – L1 – Q84 – Preparation of not-for-profit accounts"

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