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31 August, 18:18

Money to pay current expenses for a municipal revenue bond would normally be placed in which of the following funds? (A) Contingency fund (B) Surplus fund (C) Maintenance fund (D) Sinking fund

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  1. 31 August, 18:50
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    D) Sinking fund

    Explanation:

    A sinking fund is an account established to be used in the settling of debts. The corporate or institution that creates a sinking fund deposits money regularly as a way of saving it for future debt payments. A sinking fund, is in away a savings account that accumulates funds for repaying large and future debts.

    Municipal authorities use sinking funds to pay their bond expenses when they mature. The municipal contributes funds in the years leading to the bond's maturity. Sinking funds gives confidence to investors that the municipal will not default on its payments.
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