Accounting – 6.4 Interested parties | e-Consult
6.4 Interested parties (1 questions)
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Why register as a club?
Registering as a club provides a clear legal structure for the group, separating the club's finances from the personal finances of the members. This is important for accountability and transparency. It also allows the club to maintain its own bank account and record its financial transactions separately. This is crucial for accurate financial reporting and potential future fundraising activities.
Relevant Accounting Principles:
- Accrual Accounting: Revenue is recognised when earned (when the goods are sold) and expenses are recognised when incurred (when the electricity bill is paid), regardless of when the cash changes hands.
- Double-Entry Bookkeeping: Each transaction affects at least two accounts (e.g., cash and revenue).
- Going Concern: The accounting records assume the club will continue to operate in the foreseeable future.
- Matching Principle: Expenses should be matched with the revenues they helped to generate (e.g., the cost of ingredients should be matched with the sales revenue).
- Cost Principle: Assets are recorded at their historical cost.