sinking fund noun
: a fund set up and accumulated by usually regular deposits for paying off the principal of a debt when it falls due
First Known Use of SINKING FUND
sinking fund noun (Concise Encyclopedia)
Fund set aside by a corporation or government agency for the purpose of periodically redeeming bonds, debentures, and preferred stocks. The fund is accumulated from earnings, and payments into the fund may be based on either a fixed percentage of the outstanding debt or a fixed percentage of profits. Sinking funds are administered separately from the corporation's working funds by a trust company or trustee. The purpose of a sinking fund is to assure investors that provision has been made for the repayment of bonds at maturity.
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