Question

All membership fees collected by a non-trading concern must be entered in the assets side of the balance sheet. Justify for or against.

Justify for or against:

All membership fees collected by a non-trading concern must be entered in the assets side of the balance sheet.

Answer 1

Against:

1. All membership fees collected by a non-trading concern should not be entered on the asset side of the balance sheet.
2. Membership fees are typically considered revenue and should be recorded in the Income and Expenditure Account.
3. Only if the membership fees are received in advance for future periods should they be treated as a liability and shown on the liabilities side of the balance sheet as "Membership Fees Received in Advance." Regular membership fees for the current period are not assets; they are income.