Account for subscriptions, life membership and donations
Adjust subscription income for amounts due or received in advance, and classify other receipts according to their terms.
Exam scope and assessment notes
Cambridge International AS & A Level Accounting 9706, 2026–2028 syllabus, Version 2. These original lessons map all five Topic 3.1 objectives: financial-statement purpose; partnership changes; clubs and societies; manufacturing accounts; and limited-company financial statements and notes. Practice is self-checked, not an official Cambridge grade. Full timed Papers 1–4 and human subject-teacher review remain outstanding.
Before you begin
- Use the Topic 1.5 adjustment and statement skills: apply accruals, distinguish capital from revenue, reconcile balances, and keep each entity's owners' funds separate from income and cash.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
A member pays next year's subscription before year end. What is it at this reporting date?
What you will learn
- Prepare a subscriptions account from cash and accrual data
- Account for life membership over the entitlement period when required
- Assess donation terms and distinguish restricted funds from ordinary income
Recognise subscriptions in the correct period
The subscriptions account reconciles cash received with income for the year. Subscription income = cash received + closing subscriptions accrued − opening subscriptions accrued + opening subscriptions received in advance − closing subscriptions received in advance.
An amount due at year end is an asset; cash received for a future period is a liability until earned. Show opening balances reversing in the current period and closing balances carried forward. A clear T-account can help prevent reversing the signs.
Use the terms for life fees and donations
A life-membership payment covers access over multiple periods. Recognise it according to the membership entitlement, relevant reporting requirements and the stated or adopted policy; if the problem specifies straight-line recognition over a term, defer the unearned remainder as a liability.
A donation may be unrestricted revenue or restricted for a specified purpose. Its classification depends on the donor's terms and the club's adopted accounting policy. A restricted receipt can require separate fund disclosure; do not automatically treat every donation as revenue or capital without evidence.
Pause and explain
A $6,000 life fee covers three years, and the stated policy recognises it evenly over those years. What income is recognised in year one?
Worked example
Cash subscriptions are $12,000; opening receivables $1,000; closing receivables $1,500; opening subscriptions in advance $500; closing advances $800. Find current-year subscription income.
Show the worked solution
- Start with cash: $12,000.
- Adjust accrued subscriptions: +$1,500 − $1,000.
- Adjust advances: +$500 − $800. Income = $12,200.
Answer Subscription income is $12,200.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
Cash subscriptions are $15,000; opening receivable $900; closing receivable $1,100; opening advance $400; closing advance $700. Calculate current-year subscription income.
Give me a hint
Add the closing accrued asset and opening advance; subtract the opening accrued asset and closing advance.
Compare my reasoning
- Cash $15,000 + closing receivable $1,100 − opening receivable $900.
- Add opening advance $400 and subtract closing advance $700.
- Subscription income = $14,900.
Current-year subscription income is $14,900.
Look for these in your work
- Cash used as starting figure
- Accrual adjustments correct
- Advance adjustments correct
A club receives $9,000 for life membership covering six years. Its stated policy recognises the fee evenly over the membership term. Calculate year-one income and closing deferred income after year one.
Give me a hint
Spread the receipt over six years and defer the portion relating to five future years.
Compare my reasoning
- Annual income = $9,000 ÷ 6 = $1,500.
- Amount remaining for five years = $9,000 − $1,500 = $7,500.
- Recognise $1,500 in income and carry $7,500 as deferred income/liability, assuming no refunds or other terms.
Income is $1,500 and $7,500 is deferred for future membership periods under the stated policy.
Look for these in your work
- Term used
- Current-year amount calculated
- Future entitlement deferred
A donor gives $20,000 for a new accessible sports court. The society also receives $20,000 in ordinary annual subscriptions. Explain why the equal cash amounts do not imply equal income treatment.
Give me a hint
Read the restriction and membership period, not only the cash amount.
Compare my reasoning
- Ordinary subscriptions are recognised for the membership period they relate to, adjusting amounts accrued or received in advance.
- The donation is restricted to a stated facility, so the terms and adopted policy determine separate fund or revenue presentation.
- Show the restriction clearly and avoid using restricted resources for ordinary expenditure if the terms prohibit it.
Cash amount alone does not decide classification. Subscription income follows membership entitlement; the donation's restriction and accounting policy determine its treatment and permitted use.
Look for these in your work
- Subscription timing considered
- Donation restriction considered
- Policy and use stated
Common mistakes
- Subtracting closing receivables instead of adding them
- Recognising the full life-membership receipt without considering the covered period or terms
What can you explain now?
How does closing subscriptions receivable affect current-year subscription income?
Compare with the explanation
It is added to cash received
The club earned the subscription in the current period even though cash is still due.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
Write the subscription-income formula and identify which closing balance is an asset and which is a liability.
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.