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Which of the following statements are true about the sinking fund ?

A. In the sinking fund, a fixed amount at regular intervals is deposited.

B. Sinking fund can be used in an emergency.

C. In the sinking fund, any amount, anytime, can be deposited.

D. Sinking fund can be used only for the purpose it was created.

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 2

A sinking fund requires a fixed deposit at fixed regular intervals and is reserved strictly for the purpose it was created for, such as replacing an asset or redeeming a debt. So A and D are true; B and C describe an ordinary savings account instead.

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