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What is the purpose of a sinking fund?
  • a)
    To invest in outside securities for high returns
  • b)
    To create secret reserves for public confidence
  • c)
    To meet known liabilities or replace fixed assets
  • d)
    To distribute dividends among shareholders
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
What is the purpose of a sinking fund?a)To invest in outside securitie...
A sinking fund is created to systematically set aside funds from profits in order to meet known liabilities, such as repayment of debts or replacement of fixed assets, when they become due.
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What is the purpose of a sinking fund?a)To invest in outside securities for high returnsb)To create secret reserves for public confidencec)To meet known liabilities or replace fixed assetsd)To distribute dividends among shareholdersCorrect answer is option 'C'. Can you explain this answer?
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