Theory question 104
Not-for-Profit Organisations4. (a) Distinguish between subscription in advance and subscription in arrears. (b) List four features of an Income and Expenditure Account.
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(a) Subscription in advance is money received from members for a future year; it is a current liability of the club at the year end and is deducted from this year's subscription income. Subscription in arrears is subscription due for the year but not yet paid; it is a current asset and is added to this year's income.
(b) Any four: it is the non-profit body's version of the profit and loss account; it records only revenue (not capital) items; it is prepared on the accruals basis (adjusted for amounts owing and prepaid); it shows depreciation; the excess of income over expenditure is a surplus and the opposite a deficit; it is a nominal account covering a period.
Advance = liability, arrears = asset.