A standard arrangement for the orderly retirement of long-term debt calls for the corporation to make regular payments into a(n):
A) custodial account.
B) sinking fund.
C) retirement fund.
D) irrevocable trustee fund.

Question

Quizplus · Accepted Answer

A sinking fund is a means for a corporation to set aside money over time to retire its debt. It helps ensure that the company can pay off or redeem its bonds or preferred stock at a future date, thus providing a systematic approach to debt retirement.

A Standard Arrangement for the Orderly Retirement of Long-Term Debt