What is subscription in NPO – Treatments and Examples:

What is subscription in NPO-min

In the financial Statements of Not-for-profit organisations, there is one of important income is of Subscription received. we will explain all the concepts related income of subscription in NPO. These are shown as the following: –

1. Meaning of Subscription in NPO: –

Subscription in NPO means pays 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 Incomes and expenditure account. These both treatments are shown below: –

1. Treatment of Subscription in Receipts and Payment A/c: –

All the amounts of subscriptions received during the year will be Debited in the receipts and payments account, no matter for which year it has received. That means it may be received for the current year, previous year, or next year(s).

For Example: –

Subscription received in the Financial year 2020-21 shown as following: –

  • 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 the 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 subscription in the receipts and payments account which has 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: –

  • 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 the 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 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 incomes and expenditure account which is related to the current year only.

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