Equipment purchase impacts cash flow summary and balance sheet in club accounting

Steps:

• Classify transaction: Equipment costing $5000 paid by cheque is capital expenditure, not revenue expense.
• Record cash outflow: Appears as payment in receipts and payments account, reducing cash balance.
• Record asset: Equipment added as fixed asset in statement of financial position, offset by cash decrease.
• Check income effect: No direct expense in income and expenditure account; only future depreciation would affect it.

Why C is correct:

• Capital purchases are recorded in the receipts and payments account (cash basis summary) per non-profit accounting standards and appear as non-current assets in the statement of financial position, with no immediate profit/loss impact.

Why the others are wrong:

• A: Income and expenditure account unaffected, as purchase is not an expense.
• B: Income and expenditure account unaffected by capital transaction.
• D: Ignores receipts and payments account, which captures the cheque payment.

Final answer: C