A level-readyAll subjects · Accounting · WAC11 The Accounting System and Costing
Clubs: receipts and payments, subscriptions and life membership
Edexcel IAL Accounting · WAC11 The Accounting System and Costing
Clubs and societies exist to provide services to members, not to make a profit. They use different names for their statements and need special accounts for subscriptions and life membership (spec 1.3.14, 1.3.16 and 1.3.17).
How a club differs from a sole trader
| Sole trader | Non-profit-making club |
|---|---|
| Statement of profit or loss | Income and expenditure account |
| Profit / loss | Surplus / deficit (excess of income over expenditure) |
| Capital | Accumulated fund |
| Owned by the owner, who takes drawings | Owned by the members; no drawings |
| Aim: profit | Aim: provide facilities to members |
The 2024 examiners' report found many candidates unclear on this difference
Receipts and payments account
A receipts and payments account is a summary of the cash book: opening cash and bank, all receipts, all payments, closing balance.
Limitations: it ignores accruals, prepayments and depreciation, mixes capital and revenue items (buying equipment appears beside paying rent) and shows no surplus or deficit. That is why clubs with significant assets also prepare an income and expenditure account, which uses the accruals concept.
Subscriptions and life membership
The subscriptions account finds the income for the year. Arrears are like trade receivables (debit balances); subscriptions in advance are like other payables (credit balances). The transfer to the income and expenditure account is the balancing figure; the 2024 examiners' report noted candidates wrongly transferred the bank receipts instead.
| Debit | £ | Credit | £ |
|---|---|---|---|
| Balance b/d (arrears) | 300 | Balance b/d (in advance) | 180 |
| Income and expenditure account | 8,490 | Bank | 8,400 |
| Balance c/d (in advance) | 240 | Balance c/d (arrears) | 450 |
| 9,030 | 9,030 |
Subscriptions account: income £8,490
Worked example
A club credits life membership fees to a life membership account and releases each fee to income over 10 years, starting in the year received. The opening balance is £7,200, of which £900 is released each year. New life fees of £3,000 are received. Find the income and the closing balance.
- Release of new fees = 3,000 / 10 = 300.
- Total released to income = 900 + 300 = 1,200.
- Closing balance = 7,200 + 3,000 - 1,200 = 9,000.
Answer: Income £1,200; closing life membership balance £9,000, shown as a liability (deferred income).
Check yourself
- A club received subscriptions of £8,400 in cash. Arrears were £300 at the start and £450 at the end; subscriptions in advance were £180 at the start and £240 at the end. Calculate subscriptions income.
Show answer
£8490. 8,400 - 300 + 180 + 450 - 240 = 8,490.
- Subscriptions received were £12,600, including £400 for last year and £700 for next year. No subscriptions were owing at the year end. Calculate subscriptions income.
Show answer
£11500. 12,600 - 400 - 700 = 11,500.
- Life membership fees of £5,000 are received. They are released to income over 20 years. How much is income in the first year?
Show answer
£250. 5,000 / 20 = 250.
- What is the club equivalent of a sole trader's capital?
- Surplus
- Subscriptions
- Life membership account
- Accumulated fund
Show answer
Accumulated fund. Accumulated fund = total assets - liabilities.
- Which is a limitation of a receipts and payments account?
- It does not show the cash balance
- It ignores accruals and depreciation, so it does not show the true surplus
- It includes amounts owing to the club
- It must be audited
Show answer
It ignores accruals and depreciation, so it does not show the true surplus. It is only a cash summary.
- Subscriptions paid in advance at the year end are shown in the statement of financial position as
- a current asset
- part of the accumulated fund
- income
- a current liability
Show answer
a current liability. The club owes members a year of membership: deferred income.
Sources
Last updated 8 November 2026. Spotted a mistake? Tell us.