BALANCE SHEET

Introduction

• The balance sheet of a non-profit making organisation is similar to that of a trading organisation, except that there are no drawings in the balance sheet of non-profit making organisations. 
• There are also some differences in some of the terms used in the balance sheet of a non-profit making organisation when compared to that of a profit making organisation.
• The terms are shown in the table below:

Terms used and their representations

Non-profit making organisations	Profit making organisation
Accumulated fund	Capital
Surplus	Net profit
Deficit	Net loss

• The terms used in a non-profit making organisation are meant to clearly show that the business is not after profit making.

Calculation of accumulated fund and balance sheet preparation

• The balance sheet is drawn in the same way to that of profit making organisations, after determining the accumulated fund.
• Accumulated fund is calculated by the formula; Total assets - Total liabilities or by drawing up a statement of affairs of the organisation. 
• The example below shows how a statement of affairs is prepared.

Example 1

  
The following are assets and liabilities of Makiwa Golf Club on 1 January 2014 and 31 December 2014

	2014 January 1	2014 December 31
	$	$
Club creditors	2 000	870
Club fixtures and fittings	3 500	3 095
Club Equipment	2 700	4 295
Club stock	860	580
Club wages owing	1 000	150
Club prepaid electricity	1 580	120
Club debtors	2 500	1 070

  Required

(a) Calculate the accumulated fund of Makiwa golf club as at 1 January 2014.
(b) Prepare Makiwa golf club's balance sheet as at 31 December 2014 (using the T-format).
   

Answer

(a)

MAKIWA GOLF CLUB's Statement of affairs as at 1 January 2014
Assets Fixtures and fittings Equipment Stock Prepaid electricity Debtors Total Assets Less liabilities: Creditors Wages owing	$ 3 500 2 700 860 1 580 2 500 2 000 1 000	$ 11 140 3 000
Accumulated fund		8 140

   
(b)
                                              

Makiwa Golf Club's Balance sheet as at 31 December 2014
	$	$		$	$
Fixed assets			Accumulated fund		8 140
Fixtures and fittings	3 095		Current liabilities
Equipment	4 295		Creditors	870
Total fixed assets		7 390	Wages owing	150
Current assets			Total liabilities		10 20
Stock	580
Debtors	1 070
Prepaid electricity	120
Total current assets		1 770
		9 160			9 160

Example 2

  The following are assets and liabilities on 1 January 2019 and 31 December 2019 for Bar Club. Calculate the accumulated fund and then prepare a balance sheet.

 

	2019 January 1	2019 December 31
	$	$
Club creditors	2 590	2 700
Club fixtures and fittings	1 500	3 000
Club machine	2 700	4 500
Bank overdraft	550	1 100
Motor vehicle	2 860	2 950
Club rates owing	750	1 350
Club prepaid wages	1 100	1 120
Club debtors	3 500	2 700
Loan	-	300
Premises	1 000	1 200
Cash	950	600
Surplus from Income and Expenditure		900

Answers

BAR CLUB's Statement of affairs as at 01 January 2019
Assets: Premises Fixtures and fittings Machine Motor vehicle Prepaid wages Debtors Cash		$ 1 000  1 500 2 700 2 860 1 100 3 500 950
Total Assets		13 610
Less liabilities: Creditors Rates owing Bank overdraft	2 590 750 550
Total liabilities		3 890
Accumulated fund		9 720

                          

Bar club's  Balance sheet as 31 December 2019
	$	$
Non-current assets
Premises		1 200
Machine		4 500
Motor vehicles		2 950
Fixtures and fittings		3 000
		11 650
Current assets
Debtors	2 700
Prepaid wages	1 120
Cash	600
		4 420
Total Assets		16 070
Less current liabilities
Creditors	2 700
Rates owing	1 350
Bank overdraft	1 100
Long term liabilities
Loan	300
Total liabilities		(5 450)
Net Assets		10 620
Financed by:
Accumulated fund		9 720
Add: Surplus		900
		10 620