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Question
Select the most appropriate answer from the alternatives given below and rewrite the sentence.
‘Outstanding subscription’ at the end of Accounting year represents _____________.
Options
a liability
an expenditure
an asset
a capital fund
Solution
‘Outstanding subscription’ at the end of Accounting year represents an asset.
Explanation: Subscriptions are the main source of income for an NPO. Outstanding subscription represents amount receivable on account of subscriptions. Such outstanding income at year-end is an asset and, therefore, shown on the Assets side of the Closing Balance Sheet (being closing balance of subscription).
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