Question

4. Prize ſund Rs.10000, Interest on prize fund investments Rs.1000. Prize paid Rs.2000,
Prize fund investment Rs.8000. What will be its treatment
a Rs.20000 on liability side, Rs. 8000 on Assets side
b. Rs.1000 on liability side, Rs. 8000 on Assets side
c.. Rs. 1700 on liability side,Rs. 8000 on Assets side
d. Rs. 9000 on liability side, Rs. 8000 on Assets side​

Answer 1

d. Rs. 9000 on liability side, Rs. 8000 on Assets side​

Answer 2

Answer:

the correct option is D i.e. Rs. 9000 on liability side, Rs. 8000 on Assets side

Explanation:

In non-profit organisation, special funds are maintained for special purpose.

Prize fund is a special or specific fund which is used only for activities as prize. Prize fund are of capital nature and should be shown in the balance sheet.

• Income related to prize fund should be added to prize funds in the balance sheet. Here, in this question, interest on prize fund investment Rs. 1000 is added to prize fund.
• Expenses related to prize fund  should be deducted form prize funds in the Balance sheet. Here, in this question, prize paid is an expenses which is deducted form prize fund.
• In case of surplus it is better to keep in the balance sheet.
• Prize fund investment is an asset which belongs to non-current assets.

To better explanation see the photo