Question 1

As a treasurer of the club, what recommendations would you bring to the members when presenting these accounts at an AGM

Accepted Answer

If The club has a large Bank balance it should consider investing much of this money in some form of an investment account in order to earn interest;

The club could consider reducing the annual subscriptions for members, which it could afford and may encourage more members to join.
+ Any other logical point given by a student that makes sense

Question 2

Explain with the use of an example what is meant by a Special Purpose Profit & Loss Account

Accepted Answer

Many not-for-profit organisations run activities to raise funds for the organisation. These activities are intended to generate profits to invest in the organisation.

The expenses and revenues relating to that particular activity are entered in a 'special profit and loss account' and the profit is then transferred to the income and expenditure account.

Examples: Running a bar, a restaurant, a lotto, a dance

Question 3

If there is a proposal to reduce annual subs by 10% for the next three years, as treasurer, what points would you make in favour of this proposal

Accepted Answer

The club is in a healthy financial position with a large bank balance. Mention all other forms of high income. State the club is well able to financially sustain a reduction in the subscription fee of 10%

Question 4

Explain why some clubs charge levies

Accepted Answer

This is a charge made by a club to its members to fund a special project such as a clubhouse extension where the club does not wish to borrow. It must be used for the purpose for which it is collected

Question 5

Why are levies treated differently to annual subscriptions in the accounts?

Accepted Answer

A Levy receipt is a capital receipt (on a once off basis or for a specific number of years) and is credited to a Levy reserve fund. It is due to the members until it is used so it is treated as a long-term liability in the balance sheet until it has been used for the
purpose it was intended. 

Subscriptions is a revenue income (received annually) charged to members for the use of facilities provided by the club and is entered as income in the Income and Expenditure Account.

Question 6

Distinguish between 'Levy' and 'Life Membership'. Explain how both are treated in the accounts

Accepted Answer

Levy – It must be used for the purpose for which it is collected. It is a capital receipt and is credited to a reserve fund. It is due to the members until it is used
so it is treated as a long-term liability in the balance sheet. Life Membership – This is where a club member pays a fee that entitles her/him to use the facilities of the club for the rest of her/his life. It is treated as a long-term liability in the balance sheet and can be written off to income over a stated number of years.

Question 7

The club has decided to lay an all purpose floor. The treasurer has proposed to increase the levy by 120 euro per annum and extend it for five more years. As an ordinary member what arguments would you make against this proposal

Accepted Answer

As a member I would make the case:
An increased levy would discourage new members and perhaps cause a drop in membership.
The club is capable of generating enough income from within as it has a surplus of income amounting to €69,099 and it is financially 
The club should use the cash and investments totalling €62,310 and borrow the remainder of €90,000
approx or continue with current levy of €80 for 5 years plus use current funds and borrow €28,000 approx.

Question 8

State and explain two limitations of a Receipts and Payments Account

Accepted Answer

Does not show whether the club is raising enough funds to cover its running costs

Amounts due but unpaid at the end of the accounting period are not included

Only shows an increase or decrease in cash although there could be outstanding bills

Does not take into account losses such as depreciation

Does not show whether the club bar or restaurant are profitable

Does not distinguish between receipts for the current year and other years

Question 9

The club is considering the installations of floodlights at a cost of 70,000. What advice would you give to the treasurer of the club

Accepted Answer

Yes I would advise the treasurer to go ahead and install the floodlights. The improved facilities would allow longer use of club courts resulting in added income from usage. This could enable the club to increase its membership and thereby increase the annual surplus of income as well as greater usage of bar. 

The club should avoid using any of the funds raised through the levy as this is more than likely earmarked for other purposes and these funds may be needed for future capital expenditure.

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Club Accounts