If retained earnings are appropriated for bond retirement, a bond retirement sinking fund must be established.

Question

Quizplus · Accepted Answer

Appropriating retained earnings for bond retirement does not necessarily require the establishment of a bond retirement sinking fund. The appropriation is an internal accounting decision to earmark funds for future use, while a sinking fund is a specific type of fund set up to pay off debt or bonds.

If Retained Earnings Are Appropriated for Bond Retirement, a Bond