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JAMB Principles of Accounts 1995 Question 29

Question 29

Not-for-Profit Organisations

Subscriptions in arrears are

  1. A.credited to the income and expenditure account and shown as a liability in the balance sheet
  2. B.debited to the income and expenditure account and shown as an asset in the balance sheet
  3. C.credited to the income and expenditure account and shown as an asset in the balance sheet
  4. D.debited to the income and expenditure account and shown as a liability in the balance sheet.
Show the answer and explanation

Answer: C (credited to the income and expenditure account and shown as an asset in the balance sheet)

Explanation

Subscriptions owed by members are income earned, so they are credited to the income and expenditure account, and as amounts owed to the club they are a current asset.