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JAMB Principles of Accounts 2011 Question 31

Question 31

Not-for-Profit Organisations

The subscription paid in advance is treated in the balance sheet of a club as

  1. A.a surplus
  2. B.a liability
  3. C.a deficit
  4. D.an asset.
Show the answer and explanation

Answer: B (a liability)

Explanation

The club owes the member a year of membership, so subscriptions received in advance are a liability.