In Sinking Fund for redemption of Debentures Account, the amount is transferred every year froma)Reserve Accountb)Profit and Loss Accountc)Capital Accountd)None of the aboveCorrect answer is option 'B'. Can you explain this answer?

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In Sinking Fund for redemption of Debentures Account, the amount is transferred every year from

a)
Reserve Account
b)
Profit and Loss Account
c)
Capital Account
d)
None of the above

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

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In Sinking Fund for redemption of Debentures Account, the amount is tr...

Option 2 : Profit and Loss Account
Important PointsSinking Fund -

A sinking fund is a specific kind of fund that is established with the intention of paying off debt.
The account holder routinely sets aside a specified sum of money and utilizes it only for that reason.
Corporations frequently use it for bonds and deposit funds to purchase issued bonds or portions of bonds before the maturity date.
Each year, profits are used to fund a sinking fund or debt redemption fund in an equal amount.
After debentures are redeemed, the remaining funds in the Debentures Sinking Fund are moved to the General Reserve account.
It is transferred to the general reserve account since it is the portion of the redeemed debenture proceeds that is held apart.

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In Sinking Fund for redemption of Debentures Account, the amount is transferred every year froma)Reserve Accountb)Profit and Loss Accountc)Capital Accountd)None of the aboveCorrect answer is option 'B'. Can you explain this answer?

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