Clubs and Non Profit Organizations

Topics: Expense, Income statement, Capital expenditure Pages: 24 (8129 words) Published: May 6, 2012

What’s the deal?
Clubs are very common establishments in our society. Firstly, before I further explain all the required information, we have to understand that a club operates differently as compared to a normal business/enterprise. The most imperative difference between a business and this sports club is that a business is established with the aim of generating profit which the owner is entitled to because the owner is the person who provides the start-up capital. The low down

A sports club on the other hand, it is established to provide facilities to the members and no profit is made. If, through fund raising efforts the club makes, the income generated exceeds the expenses incurred, then that money is called a SURPLUS. This money is then recorded in an account called the ACCUMULATED FUNDS. In a business, if the money made on sales or services rendered etc. exceeds the expenses, this money would be called a PROFIT and deposited into an account called BANK. To better comprehend the above with regards to the operation of a sports club i.e. Western cape Soccer club, here is a simple diagram:

In this instance we are handling a sports club. The main purpose of this sports club is to enable its members (not customers as in a business) to take part in a sport that is soccer and also provides the facilities required to train for the sport. You will also understand that in a club, the most recurrent source of income is the MEMBERSHIP FEES paid by members to the club and then followed by ENTRANCE FEES and so forth. In a business, the owner may decide to increase the price of a product by a certain percentage to make profit from it. For instance he buys an apple form a supplier for R1.00; he increases the price by 50% (R0.50). He then sells it for R1.50 and make R0.50c profit on that apple. All this is not done in clubs unless a club has a tuck shop. Money earned is put towards paying off all operating expenses such as electricity, water, stationery etc. as well as to improve the members’ facilities.

To better comprehend this concept, her is a simple diagram to roughly get an idea of how sports club operate. SPORTS CLUB- Western Cape Soccer Club


1. Main sources of income
The clubs main sources of income are:
Income from membership fees
Income from entrance fees
Income from refreshments sold
Income from the clothing store
Income from membership fees
Income from entrance fees
Income from refreshments sold
Income from the clothing store

i. Membership fees
When money is received by the sports club through members paying the set membership fee, this money is regarded as an income. The proper name of the account is MEMBERSHIP FEES. Membership fees are a major portion of the club’s income.

Just like any other income, membership fees earned increase on the credit side. Usually membership fees are paid annually or the business can decide the membership fee be paid monthly or even quarterly. In the instance of Western Cape Soccer Club, the members pay once a year, i.e. p.a. Western Cape Soccer Club has 260 members where the junior members pay R100 p.a. and senior members pay R250 p.a. Normally membership fees are fixed.

Members get written off if they haven't paid their fees. MEMBERSHIP FEES WRITTEN off is the name of the account and these fees can get written off if members do not pay half way through the year or even if the next financial year approaches and members have not paid. If members pay their fees up front in the previous year for the next year, the contra-account will be INCOME RECEIVED IN ADVANCE and in some business members will get a voucher for the tuck shop, bar, coffee shop or clothing shop.

If members pay late they can be charged interest for each month that their fees are late up until 6 months when they get written off.

ii. Entrance fees
Entrance fees are received by the club when new members join the Western Cape...
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