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WAEC Financial Accounting 2014 Question 44

Question 44

Not-for-Profit Organisations

Subscription in advance is classified in the balance sheet as

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

Answer: B (a liability.)

Explanation

Subscriptions received for a future year are owed back to members as service, so they are a current liability.