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UI Post-UTME Financial Accounting 2025 (Model questions) Question 23

Question 23

Not-for-Profit Organisations

A receipts and payments account showed the following: Subscriptions received: ₦96,000 Subscriptions in arrears (opening): ₦8,000 Subscriptions in advance (opening): ₦5,000 Subscriptions in arrears (closing): ₦6,000 Subscriptions in advance (closing): ₦9,000. Which of the following are CORRECT?
I. Subscription income for the I&E account = ₦90,000
II. Subscriptions in advance are treated as current liabilities
III. Subscriptions in arrears are treated as current assets
IV. Subscription income = ₦86,000

  1. A.I, II and III only
  2. B.II, III and IV only
  3. C.I and IV only
  4. D.All of the above
Show the answer and explanation

Answer: A (I, II and III only)

Explanation

Income = 96,000 − 8,000 + 6,000 + 5,000 − 9,000 = ₦90,000. Advance subscriptions are owed to members (liabilities) and arrears are owed by members (assets).