Question
Distinguish between Gratuity and Provident Fund.
| S.No. | Basis of Distinction | Gratuity | Provident Fund |
| 1. | Contributions | The employee makes no contributions. | Both the employee and the employer make regular contributions. |
| 2. | Amount | Fifteen days' wages for every year of service. | Amount standing to the credit at the time of retirement. |
| 3. | Investment | No specific investment. | The amount is specifically invested and earns interest. |
| 4. | Payment | Payable only at the time of retirement. | A part of the amount can be with-drawn during service for specified purposes. |
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| Trial Balance as on 31.03.2010 | ||
| Heads of Accounts | Dr. (₹) | Cr. (₹) |
| Opening Stock | 25,000 | |
| Purchases and Sales | 75,000 | 2,00,00 |
| Discounts | 3,600 | 6,000 |
| Debtors and Creditors | 32,000 | 15,000 |
| Bad debts | 400 | |
| Cash-in-Hand | 3,000 | |
| Machinery | 50,000 | |
| Salaries | 8,000 | |
| Carriage Inwards | 2,000 | |
| Wages | 6,000 | |
| Investments | 20,000 | |
| Land and Building | 90,300 | |
| Bank Overdraft | 20,000 | |
| Commissions | 1,350 | 3,510 |
| Interest on Investments | 2,000 | |
| Electricity | 2,000 | |
| Rent | 2,500 | |
| Insurance | 1,800 | |
| Capital | 76,440 | |
| 3,22,950 | 3,22,950 | |