Read the two statements and choose the correct option.
I. A sinking fund is built up by regular deposits to meet a known expense at a future date.
II. Money in a sinking fund can be taken out at any time for any purpose, like money in a savings account.

Only ICorrect answerYour answerOnly IICorrect answerYour answerBoth I and IICorrect answerYour answerNeither I nor IICorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

I: replacing a machine or repaying a bond are typical targets of a sinking fund. True.
II: a sinking fund is set aside for its purpose until the date; a savings account can be drawn on freely. False.

Ten questions from Perpetuity, Sinking Funds & Bonds, at your own pace.

Ten questions from Perpetuity, Sinking Funds & Bonds, at your own pace.

Read the two statements and choose the correct option.I. A sinking fund is built up by regular deposits to meet a known expense at a future date.II. Money in a sinking fund can be taken out at any time for any purpose, like money in a savings account.