Prepaid dues definition

What are Prepaid Dues?

Prepaid dues are fees paid to a membership organization, covering a time period that has not yet expired.

Accounting for Prepaid Dues

The amount of prepaid dues is recorded by the payer in a current asset account (such as prepaid expenses or a separate prepaid dues account). As each successive month in the coverage period expires, a proportionate amount of the prepaid dues is charged to expense. If the total amount paid is immaterial, then the accountant may instead elect to charge it entirely to expense in the period in which it was incurred. This accounting treatment only applies when a business is using the accrual basis of accounting. If it is instead using the cash basis of accounting, then it charges the full amount of the dues to expense as soon as they are paid to the seller.