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Clubs: trading accounts and the income and expenditure account

Edexcel IAL Accounting · WAC11 The Accounting System and Costing

A club may run activities such as a bar or cafe to raise funds. Each has its own trading account; its profit feeds into the income and expenditure account, and the accumulated fund replaces capital (spec 1.3.15 and 1.3.19).

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Trading account for an activity

Prepare it exactly like a sole trader's trading section: sales less cost of sales (with purchases adjusted for opening and closing payables), less direct costs such as bar staff wages. The result is 'Profit on bar' (or loss), taken to the income and expenditure account.

Bar trading account££
Bar sales18,400
Opening inventory1,200
Purchases (9,500 + 700 - 400)9,800
Less Closing inventory(1,500)
Cost of sales(9,500)
Gross profit8,900
Less Bar wages(3,000)
Profit on bar5,900

Income and expenditure account

Lists income (subscriptions, profits on activities, life membership released, donations used for revenue purposes) and expenditure (rent, heat and light, depreciation, honoraria), on the accruals basis. The result is a surplus (excess of income over expenditure) or a deficit.

Income and expenditure account££
Income
Subscriptions8,490
Profit on bar5,900
Life membership released1,200
15,590
Expenditure
Rent4,800
Heat and light2,150
Depreciation of equipment1,600
Secretary's honorarium1,000
(9,550)
Surplus for the year6,040

Accumulated fund and statement of financial position

If the opening accumulated fund is not given, find it with a statement of affairs at the start of the year: all assets (including subscriptions in arrears and bar inventory) less all liabilities (including subscriptions in advance and the life membership balance). Closing accumulated fund = opening fund + surplus (or - deficit).

Statement of affairs at start of year£
Equipment (carrying value)16,000
Bar inventory1,200
Subscriptions in arrears300
Bank3,400
Less Bar payables(400)
Less Subscriptions in advance(180)
Less Life membership account(7,200)
Accumulated fund13,120

Worked example

Find the closing accumulated fund using the figures above.

  1. Opening accumulated fund = 20,900 - 7,780 = 13,120.
  2. Surplus = 6,040.

Answer: Closing accumulated fund = £19,160.

Key idea: Activities have their own trading accounts; their profit is income of the club. Surplus or deficit replaces profit; the accumulated fund replaces capital.

Check yourself

  1. Bar suppliers were paid £11,200. Bar payables were £650 at the start and £900 at the end. Calculate bar purchases.
    Show answer

    £11450. 11,200 + 900 - 650 = 11,450.

  2. Bar sales £22,000; opening bar inventory £1,500; bar purchases £12,400; closing bar inventory £1,900; bar wages £4,200. Calculate the profit on the bar.
    Show answer

    £5800. Cost of sales 12,000; gross profit 10,000; less wages 4,200 = 5,800.

  3. Income: subscriptions £9,600, profit on cafe £3,100. Expenditure: rent £5,000, depreciation £1,400, general expenses £2,700. Calculate the surplus or deficit (enter a deficit as negative).
    Show answer

    £3600. 12,700 - 9,100 = 3,600 surplus.

  4. At the start of the year a club had equipment £12,000, bank £2,300 and subscriptions in arrears £200, and owed £500 for rent and £150 of subscriptions in advance. Calculate the opening accumulated fund.
    Show answer

    £13850. Assets 14,500 - liabilities 650 = 13,850.

  5. A club's expenditure is greater than its income for the year. This is described as
    • a loss of capital
    • a negative accumulated fund
    • a drawing
    • a deficit
    Show answer

    a deficit. Non-profit organisations use surplus and deficit.

  6. A club buys new equipment for £4,000 cash. Where does this appear?
    • As expenditure in the income and expenditure account
    • Receipts and payments account and the statement of financial position, but not as expenditure in the income and expenditure account
    • Only in the bar trading account
    • As a deduction from subscriptions
    Show answer

    Receipts and payments account and the statement of financial position, but not as expenditure in the income and expenditure account. It is capital expenditure; only its depreciation goes to the income and expenditure account.

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Last updated 8 November 2026. Spotted a mistake? Tell us.