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Zorluk: KolayAccounting Treatment of Subscriptions

During the year ended 31st December 2025, Harmony Social Club received N120,000\text{N}120,000 in cash from its members as subscriptions. At the end of the year, subscriptions amounting to N15,000\text{N}15,000 were still owing by members for the current year. What is the total amount to be credited to the Income and Expenditure Account as subscription income for the year?

  1. N135,000\text{N}135,000Cevap
  2. B
    N105,000\text{N}105,000
  3. C
    N120,000\text{N}120,000
  4. D
    N15,000\text{N}15,000

Cevap

N135,000\text{N}135,000 should be credited to the Income and Expenditure Account as subscription income for the year.
According to the accrual principle, revenue earned in a financial period must be recognized in that period's Income and Expenditure Account. The total subscription income is calculated by taking the cash received (N120,000\text{N}120,000) and adding the subscriptions owing at year-end (N15,000\text{N}15,000), yielding N135,000\text{N}135,000.

Adım Adım Çözüm

1
Identify total subscription cash received during the financial year
Cash received = N120,000\text{N}120,000
This forms the cash base for subscriptions collected in the period.
2
Add subscriptions in arrears (accrued income) at the end of the year
Total Subscription Income = N120,000+N15,000=N135,000\text{N}120,000 + \text{N}15,000 = \text{N}135,000
Under the accrual concept, income earned during the accounting period must be recognized regardless of whether cash has been received.

Anahtar Kavram

Accrual basis accounting for subscriptions in non-profit organizations
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Konular

Accounting Treatment of Subscriptions

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