Which of the following is NOT correct about "Sinking Fund"?

A Sinking Fund is created for one specific big expense in the future. For example, to buy a laptop costing ₹60,000 in 2 years, ₹2,500 is saved every month for 24 months in a sinking fund.

Option 1: "It is set up for particular upcoming expense."

A sinking fund is always created for one specific purpose, such as replacing old machinery, paying off a loan, or buying equipment.

This statement is correct.

Option 2: "A fixed amount at regular intervals is deposited in it."

The same amount is deposited regularly (monthly, quarterly, yearly). For example: ₹5,000 every month for 3 years.

This statement is correct.

Option 3: "It can be used only for the purpose it was created."

The money cannot be used for anything else. If created to replace a machine, it cannot be used for other purposes.

This statement is correct.

Option 4: "It is a long-term fund which can be closed at any time."

While a sinking fund is long-term, it cannot be closed at any time. The fund is committed to a specific goal and must be maintained until that purpose is fulfilled.

This statement is incorrect.

The answer is Option 4.

A sinking fund cannot be closed at any time - it must run until its specific purpose is achieved.