Financial Accounting, SS 2, Week 2

Topic: Sources of income to non-profit making organization


  • Sources of income to non-profit making organization
  • Meaning of subscription
  • Treatment of subscription in the ledger 

Sources of income to non-profit making organization 

  • Donations
  • Subscription
  • Entrance fee
  • Income from raffle draw, dinners, annual programme etc
  • Fines

Subscription: This is the contribution made by the member to the club or society at regular interval it can be paid in advance or in arrears.

  1. Subscription in arrears: This is a particular amount due from a member for a particular year but withheld it is treated as a current asset I n the club account
  2. Subscription in advance:This is prepaid by the member of club representing due for next is treated as a liabilities to the club

Treatment of subscription in the ledger

It is advisable to prepare the subscription in ledger in order to carry out necessary adjustment for advance and arrears the balance will posted to the credit side of income and expenditure account.

Illustration– write up the subscription account social club as at 31st December 1999,cash receive as subscription during the year was 25,900

31st/12/1996                                                               31st/12/1999

Subscription in arrears                 1000                                                                                   –

Subscription in advance               150                                                                                   600

Subscription account

Dr                                                                                               Cr

Owing b/d               1000                                                       prepaid b/d

Profit and loss         25900                                                     cash

Prepaid c/d           600                                                          owing c/d 29500


Accumulated fund: This is the excess of the asset over the liabilities of a non-profit making organization. It is the capital of a non-profit making association. In order to ascertain the accumulated fund a statement of affairs will be prepare

Illustration-the following are summary of the receipt and payment account of Egbe Asiko for the year ended 31st December 1992

Dr (Debit) Cr (Credit)
Balance at hand 1st Jan                              560 New furniture bought 1200
Subscription                                     7200 Employee wages 2620
Interest on Nigeria bond                      284 Other expenses 8960


  31st Dec 1991 31st Dec 1992
Club was owing surplus food 400 800
Subscription in arrears 600 800
Stock of food 320 260
Furniture 2000 2800
Nigeria Government bond 4800  


The club decide to set up a pension fund for is employees. Government bond costing 2400 was transferred to the account from the bond held at the beginning of the year.


Required-prepare accumulated fund as at 1st Jan 1992, income and expenditure account for 1992 and balance sheet as at 31st 1992