Accounting – 5.4 Clubs and societies | e-Consult
5.4 Clubs and societies (1 questions)
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Treatment in Statement of Financial Position: An accumulated fund is presented as a liability on the statement of financial position. It is typically shown in the liabilities section, often as a separate line item or as part of a broader category like 'Deferred Expenditure' or 'Funds Held'.
Information for Stakeholders: The inclusion of an accumulated fund provides valuable information to stakeholders:
- Financial Stability: It indicates the company's ability to meet future obligations without relying on external borrowing.
- Future Investment Plans: It suggests the company has planned for future investments or expenditures.
- Financial Prudence: It demonstrates responsible financial management and planning.
- Risk Mitigation: It shows the company has set aside funds to cover potential risks or unforeseen circumstances.