How to Record a Scholarship or Tuition Discount as a Contra-Revenue Allowance
Recording a scholarship granted to a student in an NGO-run school, reducing gross tuition revenue to net revenue.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Tuition Discount (Scholarship Allowance) | Contra-Revenue (+) | 5,000.00 | - |
| Student Accounts Receivable | Asset (-) | - | 5,000.00 |
💡 Accountant's Note
Scholarships are allowances that reduce gross tuition revenue to the net amount the school actually expects to collect.
Practitioner & Systems Framework
💻 ERP Architecture
Scholarships are contra-revenue (a reduction of tuition billed), not expenses. Gross tuition revenue appears higher (showing the full value of education), offset by the allowance, to arrive at net tuition revenue. Maintain a scholarship ledger by student showing the award amount, duration, renewal conditions, and satisfactory academic progress requirements.
⚠️ Audit Flags
Auditors verify that scholarships are awarded under documented criteria (merit, need, or program-specific) and approved by authorized personnel. Scholarships to related parties (staff families, board members' children) require board approval and disclosure. Net tuition revenue should reconcile to gross billings minus all scholarship allowances.
📄 Required Documentation
Scholarship award letter, student eligibility documentation, board or committee approval, scholarship ledger by student, satisfactory academic progress tracking, and note disclosure of total scholarship allowances.
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