Subscriptions

What it means

Amounts due from members of a non-trading organisation, adjusted for amounts owing and prepaid to match the period.

Example

A tennis club's annual membership fees are its subscriptions income.

Why it matters

Subscriptions are the main income for many clubs and must be adjusted for accruals and prepayments.

In practice

Subscriptions are the main income of a sports or social club. They are handled through a receipts and payments account and, more importantly, an income and expenditure account, not a trading account. In the income and expenditure account, subscriptions appear as income, but only the amount for the current period. A separate subscriptions account is often kept to adjust for members who have paid early or are in arrears.

Picture a badminton club with 50 members paying RM40 a year. Subscriptions due for the year are RM2,000. If three members have not paid by the year end, that RM120 is subscriptions in arrears. It is a current asset, and it still counts as income because it has been earned.

If two members paid next year's RM40 each in advance, that RM80 is subscriptions in advance. It is a current liability and is excluded from this year's income. The credit to the income and expenditure account is the earned figure, not the cash received.

Students often confuse this with the receipts and payments account, which records cash movements like a cash book. There, subscriptions are the cash collected. In the income and expenditure account they are adjusted to what truly belongs to the period.

If the arrears and advance adjustments tangle you up, one of our teachers can work through a full subscriptions account with you. Book a trial class.

Related terms

• Non-trading organisation
• Accumulated fund
• Accrual

Syllabus reference: Cambridge 0452 and 0985, syllabus for 2027 to 2029, sub-topic 5.5 Clubs and societies (page 17).

Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.