Read the following passage and considering that you are the Chartered Accountant of Mr. David answer the following questions.

Khelo India sports Club started the activity of searching and nurturing sports talent from village levels of the country. For this initiative, Mr. David a renowned industrialist donated ₹50,00,000 on 1st July 2020, for the construction of a new hostel and mess for upcoming sportsmen. Besides this, Mr. David offered the services of his personal chartered accountant, free of charge, to streamline the account of Total Sports Club. The chartered accountant visited the office of the Non-profit organization (NPO) on 31st March 2021 and found that till date ₹35,00,000 had been spent on construction of hostel and mess building. He also noted that the NPO had a capital fund of ₹1,20,00,000 in the beginning of the year. Other important points that he noted were that NPO had 2,000 regular members each having an annual subscription of ₹2,000 per annum. On 1st April 2020, 180 members had not paid for subscription of previous year and 20 members had paid for 2020-2021 in advance (out of which 5 had paid advance of 2021- 2022 as well). 110 Members had outstanding balance for the year 2020-21. 50 members still had not paid for 2019-20 as well and 25 members had paid for 2021- 2022 in advance (including all 5 who had paid in advance in 2019-20).

Where should be the amount of ₹50,00,000 received from Mr. David towards building and mess transferred?

Building fund

The correct answer is option 2- Building fund.

If an organization has established a fund for a specific purpose or has received donation for specific purpose then it is credited to a separate fund account. Here, donation is received from Mr. David towards building and mess transferred so it is transferred to building fund.