Consider the following statement about Sinking Fund(a) It is a method of repayment of public debt.(b) It is created by the government out of budgetary revenues every year.Which of the statements given above is/are correct?a)Only (a)b)Only (b)c)Both (a) andamp; (b)d)Neither (a) nor (b)e)None of the above/More than one of the aboveCorrect answer is option 'A'. Can you explain this answer?

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BPSC (Bihar) Exam > BPSC (Bihar) Questions > Consider the following statement about Sinkin...

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a)
Only (a)
b)
Only (b)
c)
Both (a) & (b)
d)
Neither (a) nor (b)
e)
None of the above/More than one of the above

Correct answer is option 'A'. Can you explain this answer?

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Consider the following statement about Sinking Fund(a) It is a method ...

A Sinking Fund is a fund set up by a government agency or company to reduce debt by repaying or purchasing outstanding loans and securities held with an entity.
A Sinking Fund

A Sinking Fund can help companies that are in debt in the form of bonds gradually save and prevent long repayments.
Some bonds are issued with the added function of a sinking fund. The prospectus of a bond of this type will state the dates on which the issuer has the option to repay the bond early with the sinking fund.
While sinking funds helps companies make sure they have enough money to repay their debt, in some cases they can also use the funds to buy the required shares as an exceptional bond.

Business accounting with the sinking funds

Sinking fund is usually listed as a non-current asset - in the company's balance sheet and is usually included in the list for long-term investments or other investments.
Capital-intensive companies usually issue long-term bonds to finance the purchase of new plants and equipment. Oil and gas companies are more capital because they need a lot of capital or money to finance long-term operations, such as oil drilling and drilling rigs.

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Consider the following statement about Sinking Fund(a) It is a method ...

A Sinking Fund is a fund set up by a government agency or company to reduce debt by repaying or purchasing outstanding loans and securities held with an entity.
A Sinking Fund

A Sinking Fund can help companies that are in debt in the form of bonds gradually save and prevent long repayments.
Some bonds are issued with the added function of a sinking fund. The prospectus of a bond of this type will state the dates on which the issuer has the option to repay the bond early with the sinking fund.
While sinking funds helps companies make sure they have enough money to repay their debt, in some cases they can also use the funds to buy the required shares as an exceptional bond.

Business accounting with the sinking funds

Sinking fund is usually listed as a non-current asset - in the company's balance sheet and is usually included in the list for long-term investments or other investments.
Capital-intensive companies usually issue long-term bonds to finance the purchase of new plants and equipment. Oil and gas companies are more capital because they need a lot of capital or money to finance long-term operations, such as oil drilling and drilling rigs.

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Consider the following statement about Sinking Fund(a) It is a method of repayment of public debt.(b) It is created by the government out of budgetary revenues every year.Which of the statements given above is/are correct?a)Only (a)b)Only (b)c)Both (a) & (b)d)Neither (a) nor (b)e)None of the above/More than one of the aboveCorrect answer is option 'A'. Can you explain this answer?

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