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It is one kind of fund that is created to set aside revenue to meet any future liabilities

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Sinking fund is nothing but the planned savings in order to discharge the liability at a future date.For Eg:-Debs of Rs.5L are to be redeemed after 5yrs.Assume co saves 1L each yr for next 5yrs and it invests the same.The return on such investment is also re-invested.Thus the sinking fund helps to discharge the liability.
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Sinking Fund is one kind of fund that is created to set aside revenue to meet any future liabilities or to buy fixed asset.

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A fund set up speifically to meet up future capital expense like redemtion of debentures, Maturity payments of bonds issued etc The amount kept in sinking fund can be utilised only for the purpose of caital expenditure for which it was made.

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A means of repaying funds that were borrowed through a bond issue. The issuer makes periodic payments to a trustee who retires part of the issue by purchasing the bonds in the open market.

Read more: Sinking Fund Definition | Investopedia http://www.investopedia.com/terms/s/sinkingfund.asp#ixzz3t2O6PffS

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A sinking fund is a fund established by an Company or any other economic entity by setting aside revenue over a period of time to fund a future capital expense, or repayment of a long-term debt.

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