- 1 Marks
Question
In which of the following segments of the statement of financial position of the Institute of Professional Accountants is students’ subscription received in advance recognized?
A. Non-current assets
B. Fictitious assets
C. Current assets
D. Current liabilities
E. Intangible assets
Answer
Answer: D. Current liabilities
Explanation: Subscriptions received in advance are treated as current liabilities because they represent income received for services that are yet to be provided. These are obligations to deliver services in the future, and thus, they are classified as liabilities until the services are rendered.
- Tags: Current Liabilities, Prepayments, Subscription
- Level: Level 1
- Topic: Accruals and Prepayments
- Series: NOV 2019
- Uploader: Dotse