Which one of the following statement is incorrect about sinking fund?

The correct answer is Option (4) → It can be used in any emergency. **

A sinking fund is created for a specific future purpose and cannot be used freely.

Correct interpretation:

• It has a fixed term. ✔

• It is set up for a specific upcoming expense. ✔

• A fixed amount is deposited at regular intervals. ✔

• It cannot be used in emergencies. ✘

Incorrect statement: It can be used in any emergency.