Question : Tiger Club has a prize fund of Rs.8,00,000. It incurs expenses on prizes amounting to Rs.6,00,000. The expenses should be:
Option 1: To be shown on the assets side of the balance sheet.
Option 2: To be deducted from the prize fund on the liabilities side of balance sheet
Option 3: Debited to Income and expenditure A/c
Option 4: To be deducted from the prize fund on the liabilities side of balance sheet and debited to Income and Expenditure A/c
Correct Answer: To be deducted from the prize fund on the liabilities side of balance sheet
Solution :
Expenses related to any specific fund will be deducted from it on the liabilities side of the balance sheet. All the specific funds and reserves are shown after deducting these expenses.
Hence, the correct option is 2.
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