(a) Explain the following terms as used in account of not-for-profit making organization. (i)entrance fees (ii) subscription (b) State five features of inco...

Answer Details

(a)

(i) Entrance fees: This refers to a one-time payment made by members of a not-for-profit organization upon joining the organization. Entrance fees are usually intended to cover the costs of admitting new members, such as administrative expenses or membership materials. Entrance fees are usually distinct from membership dues or subscription fees, which are recurring payments made by members over a period of time.

(ii) Subscription: This refers to the regular payments made by members of a not-for-profit organization to support the ongoing activities of the organization. Subscription fees are usually charged on a monthly, quarterly, or annual basis, and are used to cover the organization's operating expenses, such as rent, salaries, and supplies.

(b)

1. Income and expenditure account is a financial statement that shows the organization's revenue and expenses for a given period.
2. It is prepared on an accrual basis, meaning that revenue and expenses are recorded when they are earned or incurred, regardless of when payment is received or made.
3. The account is divided into two sections: the income section, which shows the sources of the organization's revenue, and the expenditure section, which shows the organization's expenses.
4. The account is used to calculate the organization's net income or net loss for the period. If revenue exceeds expenses, the organization has a net income, while if expenses exceed revenue, the organization has a net loss.
5. Income and expenditure account is a summary of the organization's financial performance for the period, and is used to assess the organization's ability to generate revenue and control expenses.