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Endowment fund of ₹2,00,000 is set up. Income from this fund (interest received) ₹15,000. The interest is:
ACredited to Endowment Fund
BReduced from capital
CCredited to I&E Account
DTreated as cash deposit
Answer & Solution
Correct answer: C. Credited to I&E Account
1. Endowment principal is preserved; only its income is generally available for use.
2. Interest earned ₹15,000 is revenue income for the period.
3. Hence credited to I&E unless restricted by donor terms.
_Source: ICAI BoS Foundation Paper 1, Ch 8 "NPO", §3.1 endowment funds_
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