Loans as cash inflows and liabilities in club accounts

Steps:

• Classify the interest-free loan as a non-current liability, not income or expense.
• Record the receipt of loan cash in the receipts and payments account as an inflow.
• Exclude it from the income and expenditure account, as it affects neither surplus nor deficit.
• Report the outstanding loan balance in the statement of financial position under liabilities.

Why C is correct:

• Per club accounting standards, receipts and payments account captures cash transactions like loan inflows, while the statement of financial position discloses liabilities per the balance sheet equation (Assets = Liabilities + Equity).

Why the others are wrong:

• A: Income and expenditure account omits loans, as they are not revenue or costs.
• B: Income and expenditure account incorrectly includes non-operating items like loans.
• D: Omits the cash receipt from the receipts and payments account.

Final answer: C