Question

You have been elected to the governing board of your church. At the first meeting you attend, mention is made of building a new church. What accounting information would the board need in deciding whether or not to go ahead?

Answer 1

1. Cash in hand and at bank balance

2. Is there land and buildings available

3. Are there any accumulated debt owed by the church

4. Collections or record of church document.

Step-by-step explanation:

1. Cash in hand and at bank balance. This an example of a current asset. The first question is how much does the church have as cash and bank balance. The reason is to ascertain whether the fund will be sufficient for the new building project.

2. Land and Buildings availability. This is a fixed asset. The board would enquire whether there is an already existing building or land with which to begin the building project.

3. Debt or loan owed by the church. Loan forms part of liability in a balance sheet. Another question to be asked is whether the church is indebted to a bank or financial institution. This will determine whether or not to continue with the building project.

4. Record of church document. Does the church have any existing document with which to support the new building? This is pertinent as to begin or abandon the plan to build a new church.