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WAEC Financial Accounting 1997 Question 3

Question 3

Not-for-Profit Organisations

Subscription in advance is treated in the Balance Sheet of non-profit making organizations as

  1. A.current asset
  2. B.fixed asset
  3. C.current liability
  4. D.accumulated fund
  5. E.goodwill.
Show the answer and explanation

Answer: C (current liability)

Explanation

Subscriptions paid in advance are owed back to members as next year's membership, so they are a current liability.