One of the tasks of a sports manager is monitoring the income and expenditure of their sporting facility. The income, as well as expenditure account, notes down a company’s sales in addition to their expenditure during a specific period of time. A total of this account calculates a business’ net income. Some income, as well as expenditure accounts, are prepared weekly in addition to monthly however most are prepared quarterly and annually. The categories of income and expenditure accounts comprise:
- Net revenue;
- Cost of goods sold;
- Gross profit;
- Selling,
- General and administrative expenses;
- Taxes;
- Dividends and net profit.
We know that many sports managers quake in their boots when they think of monitoring income and expenditure. Don’t worry! We’ve prepared an easy-to-understand guide that will help you through this process.
Information that you will need
Before you start to prepare your income and expenditure report, you’ll need the following information:
- Net Sales
- Cost of Goods Sold (CGS)
- Selling, General and Administrative Expenses (SG&A)
- Other income and expenses (in other words, taxes or dividend income)
Your first step is to gather your data. As we mentioned in the preceding paragraph, you will need to know what your net sales are in addition to your other income and expense items.
The second step is to title the spreadsheet that you’re working with, or your piece of paper, with your company’s name as well as the period that the account will cover.
Next, you need to calculate your net sales. Add up total sales as well as any allowances in order to calculate this figure. Subtract the costs of goods sold (CGS) from net sales in order to obtain a figure for your gross profit.
After this, you need to calculate your net operating profit. This is the difference between pross profit and SG&A. Calculate net income based on total expenditure. Total all the other income and expense items such as taxes, disposition of assets, unusual income from dividends or royalties. Minus this figure from your net operating profit. This amount is your net income as well as the last line item on the income and expenditure account statement.
More guidelines for sports managers to follow
- Ignore opening and dosing cash as well as bank balances which appear in the receipts and payments account.
- Eliminate all items of capital receipts and payments.
- Ascertain the income of the relevant year by deducting from the total receipts the income received on account of previous and futures years and by adding the income accrued due in the year but not received as well as the income received in the previous year but relating to this year.
- Ascertain expenditure of the relevant period by deducting expenditure both relating to preceding periods and future periods from the total payments and by adding the expenditure outstanding at the end and the expenditure prepaid in the beginning.
- Make adjustments as per additional information such as depreciation and bad debts in there are any.
- Make adjustments as per addition information for depreciation and bad debts if there are any.
- The income and expenditure account, when balanced, will disclose surplus (if the credit side is larger) or deficit (if the debit side is larger). If there is a surplus add it to the capital or accumulate fund. However, if there is a deficit deduct it from the capital or accumulated fund.
Preparing accounts doesn’t need to be a daunting task for sports managers if you are systematic and follow the steps necessary. However, if you get stuck get into contact with your accountant.
Contact Trifocus Fitness Academy
If you are passionate about sports and business, then you should combine these two loves and really become a sports manager. Check out our Sports Management Certification Course for more information.
