Question

How are the following dealt with in the accounts of a Not-for-Profit Organisation ?

Case I	Dr. (₹)	Cr.(₹)	Case II	Dr. (₹)	Cr. (₹)
Prize Fund Prizes Paid Match Expenses	12,000  15,000	50,000	Match Fund Match Expenses Investments of Match Fund Interest  on Match Fund Investments Prizes Paid	35,000  60,000 ​ 19,000	1,00,000   3,000

Answer 1

Case 1

Balance Sheet
Liabilities		Amount (Rs)	Assets	Amount (Rs)
Prize Fund	50,000
Less: Prize Paid	(12,000)	38,000

Note: Match Expenses of Rs 15,000 are not deductible from the Prize Fund. This is because the Prize Fund is maintained only to meet the expenses relating to the Prize. However, the match expenses (i.e. Rs 15,000) will be debited to the Income and Expenditure Account as there is no specific fund is maintained to meet such expenses.

Case 2

Balance Sheet
Liabilities		Amount (Rs)	Assets	Amount (Rs)
Match Fund	1,00,000		Match Fund Investments	60,000
Less: Match Expenses	(35,000)
Add: Interest on Match Fund Investments	3,000	68,000

Note: Prizes paid worth Rs 19,000 are not deductible from the Match fund because the Match Fund. This is because Match Fund is maintained only to meet the expenses relating to the Match. However, the prizes paid (i.e. Rs 19,000) will be debited to the Income and Expenditure Account as there is no specific fund is maintained for distributing the prizes. Also, the interest on Match Fund Investments is added to the Match Fund because it is an income related to this particular fund.