Alan Marshall has recently joined the All Weather Rambling (AWR) Club (not its real name) based in Glasgow. A few months after joining the AWR he attended the Annual General Meeting (AGM).

Among the items on the agenda was the Treasurer’s report. Alan did not know a great deal about accounting and so he was somewhat mystified by the ‘accounts’ presented by the Treasurer, Wendy Hargreaves. He took the opportunity to ask her a few questions but he did not understand the explanations. A copy of the accounts as presented at the meeting is shown in the Appendix. They were described as a ‘balance sheet’ and all the information was contained on one page.

After the meeting had ended Alan learnt that Wendy had been in post for nearly 20 years and the accounts had always been presented in that way. As long as the Club had some money at the bank nobody else seemed concerned about them.

When he got home, Alan decided to write to her, asking for clarification about certain items contained in the ‘balance sheet’. Wendy was very helpful and she provided him with more information. He was still not satisfied that the accounts presented a clear picture of the Club’s financial position for the year 2001/02. He also suspected that this was probably true for the preceding year as well.

The following are the questions Alan asked Wendy and the answers that she gave him.

Q What is ‘Mr Smith’s bequest’?

A A legacy left by ex Chairman, Arthur Smith, to the Club some years ago.

Q On the left had side, what does the item ‘cheques through the bank’ mean?

A Cheques that had not gone through the bank at the end of the year.

Q On the right hand side what do the ‘deposits’ mean?

A The New Year deposit relates to a booking made at a Youth Hostel for the forthcoming New Year. The Slide Show deposit is a payment to the hotel for the room booking for the Slide Show in December.

Q On the right hand side, what does the item ‘through bank’mean?

A Cheques that had not gone through the bank at the beginning of the year.
Q Were any amounts paid in 2000/01 for 2001/02?
A Yes. A deposit of £88 paid to the Rugby Club for the Christmas party held in December 2001.
Q Did we receive any money in 2000/01 that related to 2001/02?
A Yes – subscriptions of £50 in total from five members.
Required:
1 Identify those accounting rules that the Treasurer appears to have adopted in preparing All Weather Rambling Club’s accounts and explain what each of them means.
2 Giving your reasons, indicate what other accounting rules it might be appropriate for the Treasurer to adopt.
3 Prepare the Club’s accounts in a format that you believe would more clearly present its financial performance and position during and at the end of the year.