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Zorluk: OrtaIncome and Expenditure Account

During the financial year ended 31st December 2025, Horizon Professionals Club received ₦450,000 in cash as subscription fees from its members. This total included ₦40,000 for subscriptions in arrears from 2024 and ₦30,000 for subscriptions paid in advance for 2026. Subscriptions owing by members for 2025 at the end of the year amounted to ₦50,000. What is the total amount to be credited to the Income and Expenditure Account as subscription income for 2025?

  1. A
    ₦450,000
  2. ₦430,000Cevap
  3. C
    ₦470,000
  4. D
    ₦510,000

Cevap

The total amount to be credited to the Income and Expenditure Account as subscription income for 2025 is ₦430,000.
The Income and Expenditure Account recognizes revenue on an accrual basis. Starting from cash received of ₦450,000, subtracting prior year arrears of ₦40,000 and prepaid subscriptions of ₦30,000 leaves ₦380,000 cash earned for 2025. Adding the ₦50,000 currently owing yields ₦430,000 earned subscription income for 2025.

Adım Adım Çözüm

1
Identify cash received during the current year
Cash received = ₦450,000
This is the baseline starting figure extracted from the Receipts and Payments Account.
2
Deduct receipts belonging to other financial periods
Adjusted Cash = ₦450,000 - ₦40,000 (2024 arrears) - ₦30,000 (2026 advance) = ₦380,000
Under accrual accounting principles, revenue belonging to prior or future periods must be excluded from the current year's income.
3
Add income earned in the current year but not yet received in cash
Total Subscription Income = ₦380,000 + ₦50,000 (2025 arrears) = ₦430,000
Subscriptions in arrears for the current year represent earned revenue and must be credited to the Income and Expenditure Account.

Anahtar Kavram

Accrual basis adjustment of subscription income for Non-Profit Organizations
Tahmini Süre:1m 30s
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Konular

Income and Expenditure Account

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