Question

explain all about sunk fund account and solve an example

Answer 1

A sinking fund is fund which is created for a specific purpose. The sinking fund is created for following purposes:
1) To redeem or repay long term liabilities. For example: debentures, long term loans etc.
2) To replace a wasting assets. For example: mines etc.
3) To replace an assets of depreciable nature. For example: fixed assets.