CUET Preparation Today
Which of the following is correct about the Sinking Fund? |
It is a long-term account which can be closed any time. It is set-up for a particular upcoming expense. Any amount can be deposited in the sinking fund at any point of time. It can be used in any emergency. |
It is set-up for a particular upcoming expense. |
The correct answer is Option (2) → It is set-up for a particular upcoming expense. A sinking fund is created to meet a specific future obligation. It is not meant to be closed any time, it is not for emergencies and deposits are usually regular. The correct statement is: It is set-up for a particular upcoming expense. |
