Question on: WAEC Accounting - 2014
subscription in advance is classified in the balance sheet as
A
an asset
B
a liability
C
a deficit
D
a surplus
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Correct Option: B
When a company receives money inĀ advanceĀ of earning it, the accounting entry is a debit to theĀ assetĀ Cash for the amount received and a credit to the liability account such as CustomerĀ AdvancesĀ or Unearned Revenues. The subscription in advance is a liability because it is a future earning that will be due in future, it means the company is owing outsiders theĀ said amount tied to the payment.
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