Question

If there appears a Tournament Fund, then the expenses incurred on Tournament activities will be shown :

• A. on the debit side of Income and Expenditure Account
• B. on the credit side of Income and Expenditure Account
• C. by way of adding to the Tournament Fund
• D. by way of subtracting/deducting from Tournament Fund

Hint:

If the expenditure exceeds the Tournament fund, it will be shown on the debit side of the Income and Expenditure Account

Answer 1

The Correct Option is D

Understanding the Tournament Fund
A Tournament Fund is a specific-purpose fund set aside to manage income and expenses related to tournament activities. It helps track the financial aspects of such events separately from the general funds of the organization.
Accounting Treatment:
1.
The Fund: A fund like this is essentially a liability (or a capital item) on the balance sheet because it represents resources earmarked for a particular purpose.
2.
Income Addition: Any income related to the tournament (e.g., entry fees, donations) is added to this fund.
3.
Expense Deduction: Expenses incurred in conducting the tournament are deducted from the fund. Therefore, Tournament expenses are adjusted by subtracting them from the total fund to accurately track the net resources available for tournament-related activities.