Question

Q.3
On 1st April, 2019, Maitreyi club had a Prize Fund of Rs.8,00,000. It incurred expenses on prizes
amounting to Rs.8,70,000 during the year. The balance of Prize Fund in the Balance Sheet as at 31st
March, 2020 will be:
(a) Rs.70,000 (b) Rs.8,00,000 (c) (Rs.70,000) (d) Zero
[1]

Answer 1

please make brilliant answers

Answer 2

Concept:

A Prize fund is a special fund. Special funds are allocated for special purposes and need to be shown in the liabilities side of the balance sheet. The expenses related to these fund are deducted from these fund only.

Given:

Prize fund= Rs. 800000

Prizes=Rs. 870000

Find:

The amount to be taken to the liabilities side of the Balance sheet.

Solution:

Since a prize fund is given as against the prizes, hence the prize expenses will be deducted from this fund only.

Also if the expense is greater than the fund itself, the balance expense will be shown in the Income and the Expenditure account. In this case, Rs. 70,000 will be shown in the Income and Expenditure account.

Hence,

The amount of prize fund to be carried to the liabilities side of the balance sheet will ZERO.

 Prize fund 8,00,000

Less: prizes   (8,00,000)

Balance in the fund NIL

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