Explanation:

Prize funds are not shown in the receipt and payment side by preparing income and expenditure and balance sheet due to the following reasons:

1. Nature of Prize Funds: Prize funds are not considered as income, but rather as liabilities. These funds are collected for the purpose of awarding prizes to the winners of various competitions and events. As a result, they are not included in the income and expenditure account, but rather in the balance sheet as a liability.

2. Timing of Prize Distribution: Prize funds are collected in advance, but the prizes are not typically distributed until later. The income and expenditure account is prepared for a specific period, such as a year, and only includes income and expenses that occurred during that period. The prize distribution may occur after the end of the accounting period, making it difficult to accurately reflect in the income and expenditure account.

3. Accrual Basis of Accounting: In the accrual basis of accounting, income and expenses are recorded when they are earned or incurred, regardless of when the cash is received or paid. As prize funds are collected in advance, they are not considered income until the prizes are distributed. Therefore, they cannot be included in the income and expenditure account until the actual prize distribution occurs.

4. Separate Accounting: Prize funds are typically kept separate from other funds and are accounted for separately. As a result, they are not included in the receipts and payments account, which is used to record all cash receipts and payments during a specific period.

Conclusion: In conclusion, prize funds are not shown in the receipt and payment side by preparing income and expenditure and balance sheet because they are liabilities, the timing of prize distribution may not align with the accounting period, the accrual basis of accounting requires income and expenses to be recorded when earned or incurred, and they are accounted for separately from other funds.