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50/50 Fundraiser Ticket sales Revenue/Expense Question
Weekly we sold tickets for a 50/50 “pot” for several months and now have a winner. My question is should the weekly revenue be split half to a liability account and half to a revenue account then the winner would be paid the balance in the liability account or would all of the revenue be booked and recognized as revenue when received and then the winner paid out as an expense? Thank you!
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3 Replies
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I would go with the liability option. You know from the getgo that 50% of every ticket sale is owed to the winner so there would be no justification to call it revenue. And I don’t think it is necessary from the financial statement reader’s point of view to see the payout as an expense.
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I’d lean towards recording the organisation’s share as revenue and the winner’s share as a liability, rather than treating the entire pot as revenue and the payout as an expense. The key is whether the organisation has control of the full proceeds or is holding part for the winner. I’d confirm the treatment with your accountant, particularly because raffle and gaming rules can vary by jurisdiction.
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Thank you for sharing this question, Terri. The replies here are really helpful, especially the point about separating the organisation’s share from the amount owed to the winner. I also appreciate the reminder that the accounting treatment can depend on whether the organisation controls the full proceeds. For a 50/50 arrangement, keeping that distinction clear seems to make the bookkeeping much easier to follow. I would still check the final treatment with the organisation’s accountant, particularly where local gaming rules apply.