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4 cards from this section. Quick, good the night before a test.
What is a subscription adjustment?
Think about upfront payment and future income.
Why do we charge depreciation on fixed assets?
Consider wear and tear on items.
What is the significance of subscription adjustments?
Consider what happens if we include future income.
True or False: Depreciation does not affect income statements.
Think about how asset values change over time.
A charity received ₹10,000 in advance for subscriptions for next year. How will this amount appear in the financial statements? If the charity also incurred ₹3,000 in outstanding expenses during the same period, how do you report these?
Consider the time aspect of income and expenses.
If an organisation's fixed assets are worth ₹50,000 and depreciation each year is ₹5,000, what would the value of fixed assets be at the end of three years? Discuss how this affects the reported profits.
Remember to factor in the cumulative effect of depreciation on assets!
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