Non-For-Profit Organisations

Question 1

How are the life membership fees accounted for?

Answer 1

The life membership fee is a one-off payment covering an entire lifetimes as a member. Only a portion of the life membership fee is entered in the I/E of the year. This treatment is determined by the accruals concept.

Clubs need to have a policy regarding the period of time over which the life membership fee is to be taken to income. Thus, the life membership is both a source and revenue and a fund. The income is entered in the I/E a/c whilst the remaining balance is added to the accumulated fund in the SOFP.

Question 2

What are TWO advantages of having a Life-Membership Fund?

Answer 2

1. The Club receives a lump-sum from the members who opt for life-membership.
2. Less administration expenses.