A bond sinking fund is a restricted asset of a corporation that was required to set aside money for redeeming or buying back some of its bonds payable.
A bond sinking fund is reported in the section of the balance sheet immediately after the current assets. The bond sinking fund is part of the long-term asset section that usually has the heading "Investments." The bond sinking fund is a long-term (noncurrent) asset even if the fund contains only cash. The reason is the cash in the fund must be used to retire bonds, which are long-term liabilities. In other words, because the money in the bond sinking fund cannot be used to pay current liabilities, it must be reported outside of the working capital section of the balance sheet. (Working capital is current assets minus current liabilities.)
marketable securities
example of sinking fund
A sinking fund has a very important purpose. The purpose of a sinking fund is to reduce the amount of debt by repaying or purchasing outstanding loan amounts.
future value of an annuity is a reciprocal of a sinking fund
establishment of fund: petty cash fund xx cash in bank xx payment of expenses out of the petty cash fund: expenses xx petty cash fund xx
Petty cash fund is usually used in a business to make minor odd purchases, such as a sheet of postal stamps, an inkjet cassette, a pack of envelopes, etc.
petty cash
A sinking fund approach is a type of economic approach that involves setting aside some profits over time. This money is often set aside to fund large capital expenses.
A sinking fund is a fund established by a government agency or business for the purpose of reducing debt by repaying or purchasing outstanding loans and securities held against the entities. It helps keep the borrower liquid so it can repay the bondholder. It is just like a reserve fund which is used for repayment of loan.
Fluctuating fund system is handling petty cash fund wherein every expenses/voucher is debited directly with petty cash fund as a credit. The petty cash fund is debited only whenever there is a replenishment wherein the proforma entry is: