alleryStart learning →Subscription received in advance during the current year for the next year is shown in the balance sheet:
AOn the assets side, as a receivable
BAs an addition made to the capital fund
COn the liabilities side of the balance sheet
DNowhere, since the cash has been received
Answer & Solution
Correct answer: C. On the liabilities side of the balance sheet
1. Money received in advance is not income of the current year, because the service still has to be provided.
2. Until then it is an obligation of the organisation to the member.
3. The textbook states that subscriptions received in advance in the current year are shown on the liabilities side.
4. In the income and expenditure account, subscription received in advance for a subsequent year is subtracted from the subscription received.
5. Outstanding subscription moves the opposite way, appearing on the assets side.
_Source: TN HSC Class 12 Accountancy (Samacheer Kalvi, Govt of Tamil Nadu), Unit 2 "Accounts of Not-for-Profit Organisation", §2.5.4(a)_
Keep practising Accounts of Not-for-Profit Organisation
Browse all Accounts of Not-for-Profit Organisation questions for Tamil Nadu HSC (Class 12), or explore more Accountancy topics.
Related questions
A club's assets total Rs 1,30,000 and its liabilities, being subscription in advance Rs 5,How is a bank overdraft at the beginning of the year entered in the receipts and payments In the balance sheet of a not-for-profit organisation, a surplus for the year is:When a club sells old furniture, what enters the income and expenditure account?Honorarium paid to a person who is not a regular employee is:The purchase of sports materials such as balls and nets is treated as:The capital fund of a not-for-profit organisation is also called the:Interest earned on prize fund investments should be: