In the balance sheet of a not-for-profit-making organization, subscription paid in advance is regarded s a?
Answer Details
In the balance sheet of a not-for-profit-making organization, subscription paid in advance is regarded as a current liability.
Subscription paid in advance refers to the amount of money received by the organization from its members for the subscription fees for a future period. For example, if a member pays for a one-year subscription in advance, the organization receives the payment before the subscription period starts.
Since the organization has not yet provided the service or benefits related to the subscription fees, it has an obligation to provide the service or benefits in the future. Hence, the subscription paid in advance is recorded as a current liability in the balance sheet of the organization.
Current liabilities are the debts or obligations that are expected to be paid within a year. Examples of current liabilities include accounts payable, salaries payable, and taxes payable.
In summary, subscription paid in advance is considered a current liability in the balance sheet of a not-for-profit-making organization as it represents an obligation to provide services or benefits in the future.