Question

--------is created for the replacement of fixed assets or repayment of long term liabilities.

• A. Capital reserve
• B. Reserve capital
• C. Sinking fund
• D. Common good fund

Answer 1

Answer:

C. Sinking fund

A sinking fund is a fund created by an organization to: Replace fixed assets when they become obsolete, or Repay long-term liabilities at the time of maturity. It is a long-term provision to ensure that funds are available when needed, without affecting regular operations. Other options: Capital Reserve: Created from capital profits, not for repayment or replacement. Reserve Capital: Portion of uncalled capital kept as a backup, not actively used. Common Good Fund: Used for community or member welfare purposes.