Which of the following statements are true for sinking fund?
A. It is a fixed term account.
B. It is set up for a particular upcoming expense.
C. Any time, any amount can be deposited.
D. It can be used in any emergency.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → A and B only
$\text{A: Fixed term account} \;\Rightarrow\; \text{False}$
$\text{B: Set up for a specific future expense} \;\Rightarrow\; \text{True}$
$\text{C: Any time, any amount can be deposited} \;\Rightarrow\; \text{False}$
$\text{D: Used in any emergency} \;\Rightarrow\; \text{False}$
The correct statement is B only.