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Apex Cultural Society received 850,000850,000 in cash subscription fees during the financial year ended 31st December 2025. Additional subscription records reveal the following balances:

- Subscriptions in arrears on 1st January 2025: 60,00060,000
- Subscriptions received in advance on 1st January 2025: 40,00040,000
- Subscriptions in arrears on 31st December 2025: 75,00075,000
- Subscriptions received in advance on 31st December 2025: 50,00050,000

What is the exact amount in Naira to be credited to the Income and Expenditure Account as subscription income for the year ended 31st December 2025?

Answer: 855000 Naira

Answer

The amount to be credited to the Income and Expenditure Account as subscription income for the year ended 31st December 2025 is 855,000855,000.
The Income and Expenditure Account operates on the accrual concept, taking into account income earned for the specific financial year regardless of cash timing. Calculating current subscription income requires adding opening prepaid subscriptions (40,00040,000) and closing accrued subscriptions (75,00075,000) to cash received (850,000850,000), while subtracting opening accrued subscriptions (60,00060,000) and closing prepaid subscriptions (50,00050,000), yielding 855,000855,000.

Step-by-Step Solution

1
Identify cash received during the period
Subscriptions cash received = 850,000850,000
This represents the total cash inflows recorded in the Receipts and Payments Account.
2
Add amounts attributable to the current period
Add opening advance (40,00040,000) and closing arrears (75,00075,000)
Subscriptions paid in advance at the beginning of the year belong to the current year's income, while subscriptions owing at the end of the year were earned during the current year.
3
Subtract amounts not attributable to the current period
Deduct opening arrears (60,00060,000) and closing advance (50,00050,000)
Subscriptions owing at the start of the year belong to the previous year, while subscriptions prepaid at the end of the year belong to the next accounting period.
4
Calculate net subscription revenue
850,000+40,000+75,000−60,000−50,000=855,000850,000 + 40,000 + 75,000 - 60,000 - 50,000 = 855,000
Applies accrual concept rules to align income earned with the current financial period.

Key Concept

Accrual Accounting Adjustments for Subscription Revenue in Non-Profit Entities
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Topics

Income and Expenditure Account

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