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Question
All membership fees collected by a non-trading concern must be entered in the assets side of the balance sheet. Justify for or against.
Solution
Against:
- All membership fees collected by a non-trading concern should not be entered on the asset side of the balance sheet.
- Membership fees are typically considered revenue and should be recorded in the Income and Expenditure Account.
- Only if the membership fees are received in advance for future periods should they be treated as a liability and shown on the liabilities side of the balance sheet as "Membership Fees Received in Advance." Regular membership fees for the current period are not assets; they are income.
RELATED QUESTIONS
Write any two uses of the Balance Sheet?
Explain five uses of Balance Sheet.
The excess of assets over liabilities represents the ______ of the owner.
Distinguish between a Profit and Loss Account and a Balance Sheet.
Mr. Tate's financial position on 1 December, 2018 was as follows:
Stock ₹ 4,460; Debtors ₹ 890; Creditors ₹ 2 400; Cash ₹ 500; and Fixed assets ₹ 3,000.
- Draw up a statement to show his assets, liabilities and capital on 1.12.2018.
- During the month of December, 2018, the following transactions took place; Sold goods for cash ₹ 4.000; sold the balance goods on credit for ₹ 3 000; received ₹ 2 000 from debtors; paid ₹ 900 to creditors; withdrew ₹ 400 for personal use; allowed and accounted a direct payment of ₹ 500 by a debtor to one of the creditors.
Draw up a statement of his financial position at the end of the month of December 2018.
The main use(s) of a Balance Sheet for a non-trading organisation is/are ______.
It is always prepared on a particular date.
______ shows the financial position of the organization.
"A trading account reveals the financial position of an organisation." Comment.
State any two uses of Balance Sheet.
