In the financial Statements of Not-for-profit organisations, there is one of the important incomes is Subscription received. we will explain all the concepts related to the income of subscription in NPO. These are shown as the following: –
1. Meaning of Subscription in NPO: –
Subscription in NPO means paying some amount to an Organisation by its member on a regular basis. It can be collected by the Organisation on a monthly, quarterly, or yearly basis. This is the revenue for the Organisation so, it will be credited to the Income and expenditure account. But its treatment depends on the period for which it is received and in which year it is received. It may be received next year or for the previous year in the current year.
2. Treatment of Subscription in NPO:-
The subscription in NPO is treated on the basis of received for the year and received in the year. It is shown in the receipts and payments account and the Incomes and Expenditure account. These both treatments are shown below: –
1. Treatment of Subscription in Receipts and Payment A/c: –
All the subscriptions received during the year will be Debited in the receipts and payments account, no matter for which year it has been received. That means it may be received for the current year, previous year, or next year(s).
For Example: –
Subscriptions received in the Financial year 2020-21 shown as follows: –
- For 2019-2020 Rs. 10,000
- For 2020-2021 Rs. 80,000
- For 2021-2022 Rs. 8,000
- For 2022-2023 Rs. 5,000
Subscription O/s for 2020-21 Rs 15,000 and Subscription received in advance in 2019-20 Rs 5,000
Solution: –
Calculate the total amount of the Subscription which will be debited to Receipts and Payment A/c: –
| Subscription received for Current Year (2020-21) | 80,000 |
| Add: – subscription received for Previous Year (2019-20) | 10,000 |
| subscription received for Next Year (2021-22) | 8,000 |
| subscription received for Next Year (2022-23) | 5,000 |
| The total amount debited to the receipt and payment account | 1,03,000 |
Note: –
The subscription outstanding and received in advance will not be treated in the receipts and payment account because we just debited the amount of the subscription in the receipts and payments account which has been received in the current year only.
2. Treatment of Subscription in Income and Expenditure A/c: –
The amount of subscription received during the year for any year would be debited to In the receipts and payment account, but to the opposite of this In the income and expenditure account, that amount of subscription will be credited which is related to the current year only. It may be received or due but not received.
For Example: –
Subscription received in the Financial year 2020-21 shown as following: –
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- For 2019-2020 Rs. 10,000
- For 2020-2021 Rs. 80,000
- For 2021-2022 Rs. 8,000
- For 2022-2023 Rs. 5,000
Subscription O/s for 2020-21 Rs 15,000 and Subscription received in advance in 2019-20 Rs 5,000
Solution: –
Calculate the total amount of the Subscription which will be credited to Incomes and expenditures A/c: –
| Subscription received for Current Year (2020-21) | 80,000 |
| Add – subscription Outstanding for the current year(2020-21) | 15,000 |
| subscription received in advance in the previous year (2019-20) for the current Year (2021-22) | 5,000 |
| The total amount Credited to the Income and Expenditure account | 1,00,000 |
Note: –
The subscription received for the previous year(2019-20) and received in advance for next year (2021-22 & 2022-23) will not be treated in the income and Expenditure account because we just Credited the amount of subscription in the income and expenditure account which is related to the current year only.
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