subscription in advance is classified in the balance sheet as
-
A.
an asset -
B.
a liability -
C.
a deficit -
D.
a surplus
Correct Answer: Option B
Explanation
When a company receives money in advance of earning it, the accounting entry is a debit to the asset Cash for the amount received and a credit to the liability account such as Customer Advances 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 the said amount tied to the payment.