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Which of the following statement is true regarding sinking fund and saving account?

  1. A
    The sinking fund and saving account both are the same and are used for a particular purpose in the future.
  2. B
    The sinking fund is set up for a particular purpose and is to be used at a particular time.
  3. C
    We can use the sinking fund at any point in time.
  4. D
    None of the above

Solution & Step-by-step Explanation

A Sinking Fund is a fund established by an organization to set aside money specifically to repay a debt or to fund a future capital expense at a predetermined time. Unlike a general savings account, which is flexible and can be used for any purpose at any time, a sinking fund is dedicated to a specific objective and usually targets a specific future date.

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Which of the following statement is true regarding sinking fund and saving account?
A
The sinking fund and saving account both are the same and are used for a particular purpose in the future.
B
The sinking fund is set up for a particular purpose and is to be used at a particular time.
C
We can use the sinking fund at any point in time.
D
None of the above

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