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CMA Foundation · Fundamentals of Financial and Cost Accounting · Financial Statements of a Not-for-Profit Organisation

Lotus Sports Club had a Specific Fund (Tournament Fund) of ₹2,00,000 with investments of equal amount. During the year it earned interest of ₹16,000 on those investments, and spent ₹45,000 on the tournament, which was charged to the fund. In the closing Balance Sheet, the Tournament Fund will appear at:

The Tournament Fund appears at ₹1,71,000. Interest earned on the fund's investments of ₹16,000 is added to the opening ₹2,00,000, and the tournament expenditure of ₹45,000 is deducted directly from the fund, since it is a specific purpose fund.

  1. A₹1,71,000Correct
  2. B₹1,55,000
  3. C₹2,16,000
  4. D₹1,61,000

Explanation

Fund = 2,00,000 + interest 16,000 - expenses 45,000 = ₹1,71,000. The interest on specific fund investments is added to the fund, and the tournament expense is deducted from the fund rather than shown in Income and Expenditure Account. ₹1,55,000 wrongly deducts the interest.

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