Under nonprofit revenue recognition guidance, when should dues revenue be recognized?

• A. When the cash is received
• B. When the period occurs
• C. When the member signs up
• D. When the grant is eligible

Answer: (B)

Dues revenue is recognized on an accrual basis, earned as the member benefits are delivered. For a membership, the organization provides value over the period the dues cover, so revenue should be recognized gradually over that period rather than all at once when cash is received. If dues are paid upfront for a year, you record a liability (deferred revenue) at the time of payment and then recognize revenue evenly over the year as the membership benefits are used.

This matches revenue with the period in which the benefits are provided. Recognizing at cash receipt would be cash-basis treatment and doesn’t reflect when services are earned. Recognizing at signup would front-load revenue before benefits are delivered, and recognition tied to grants isn’t relevant to dues.