Sinking fund
Sinking fund is a fund that accumulates cash to pay off bonds when they are retired.
Definitions
According to College Accounting: A Practical Approach by Slater (13th edition),
- Sinking fund. A fund that accumulates cash to pay off bonds when they are retired.
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Sinking fund. Facilitates the orderly retirement of a bond issue. This can be achieved in one of two ways: (1) the company can call in for redemption (at par value) a certain percentage of bonds each year; or (2) the company may buy the required amount of bonds on the open market.
Related concepts
- Accounting (alternatively known as accountancy) is management of financial data, information, and knowledge about financial transactions of legal entities. Accountancy tends to include bookkeeping and, depending on a particilar enterprise, may also include quatitative analysis of financial data in the bookkeeping system and/or business intelligence.
