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Class : 11
Unit : Account


State in brief about sinking fund.

Ans : Sinking fund is a fund created for the purpose of repayment of liabilities and replacement of fixed assets. In order to create this fund, a certain amount is separated by appropriating out of the profit and loss appropriation account. The same amount is withdrawn from business each year and invested in profitable sector. Such amount can be utilized for redemption of liabilities and replacement of fixed assets.
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