Explain the following terms : Entrance fees, Legacy, Specific donations, Subscription.
Explain the following terms : Entrance fees, Legacy, Specific donations, Subscription.
(i) Entrance fees : It is basically received from the new members apart from the annual subscription. It may be capitalised or revenue. In absence of any information it will be treated as revenue and hence it will be shown on credit side of income and expenditure acccount.
(ii) Legacy : It is a amount which is received out of "WILL" of a deceased person. It appears on debit side of receipts and payment account. It is a capital receipt and added to capital fund in the Balance Sheet.
(iii) Specific Donations : When donation is received for a specific purpose i.e., donation for a building etc., it can be used for that purpose only and hence it will be capitalised and shown on the liabilities side of balance sheet.
(iv) Subscription : It is the main source of income of non-profit entity. Since it is of recurring nature hence it will be shown as a income and on the credit side of the income and expenditure account.
(i) Entrance fees : It is basically received from the new members apart from the annual subscription. It may be capitalised or revenue. In absence of any information it will be treated as revenue and hence it will be shown on credit side of income and expenditure acccount.
(ii) Legacy : It is a amount which is received out of "WILL" of a deceased person. It appears on debit side of receipts and payment account. It is a capital receipt and added to capital fund in the Balance Sheet.
(iii) Specific Donations : When donation is received for a specific purpose i.e., donation for a building etc., it can be used for that purpose only and hence it will be capitalised and shown on the liabilities side of balance sheet.
(iv) Subscription : It is the main source of income of non-profit entity. Since it is of recurring nature hence it will be shown as a income and on the credit side of the income and expenditure account.
