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Question
How annual subscription is dealt with in the final accounts of the not-for-profit organisation?
Solution
(A) Treatment in income and expenditure account: When subscription received for the current year, previous years and subsequent period are given separately, subscription received for the current year will be shown on the credit side of the income and expenditure account after making the adjustments given below:
- Subscription outstanding for the current year is to be added.
- Subscription received in advance in the previous year which is meant for the current year is to be added.
When total subscription received in the current year is given:
- Subscription outstanding in the previous year which is received in the current year will be subtracted.
- Subscription received in advance in the previous year which is meant for the current year is added and subscription received in advance must be subtracted.
(B) Treatment in the Balance sheet:
- Subscription outstanding for the current year and still outstanding for the previous year will be shown on the asset side of the Balance sheet.
- Subscriptions received in advance in the current year will be shown on the liabilities side of the Balance sheet.
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| Sr. No |
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| 1 | 1,100 | Prepaid | 100 | ? |
| 2 | 2,700 | Prepaid | ? | 2,000 |
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(Newly Started Art Circle)
“Jeevan Jyoti Art Circle” a newly established concern has presented the following information.
| Dr | Receipts and Payments Account for the year ending 31.03.2018. | Cr | |||||
| Receipts | Amount ₹ |
Amount ₹ |
Payments | Amount ₹ |
Amount ₹ |
||
| To Admission fees | 22,000 | By Furniture | 12,000 | ||||
| To Subscriptions | 40,000 | By Stationery | 4,000 | ||||
| To Donations | 18,000 | By Office Rent | 2,600 | ||||
| By Newspapers & Periodicals | 300 | ||||||
| By Telephone Expenses | 560 | ||||||
| By Investments | 23,000 | ||||||
| By Balance c/d | |||||||
| Cash in Hand | 7,540 | ||||||
| Cash at Bank | 30,000 | 37,540 | |||||
| 80,000 | 80,000 | ||||||
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2) Depreciate Furniture @10 % p.a
3) Full amount of Admission Fees and 50*% Donations are to be capitalized.
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