Assertion (A) : In sinking fund, a fixed amount at regular intervals is deposited.
Reason (R) : In Savings Bank Account, any amount, any time can be deposited.
Assertion (A) : In sinking fund, a fixed amount at regular intervals is deposited.
Reason (R) : In Savings Bank Account, any amount, any time can be deposited.
Options
The correct option is (B) — both A and R are true, but R is not the correct explanation of A.
Assertion (A): A sinking fund is built by depositing a fixed amount at regular (equal) intervals to accumulate a target sum — true.
Reason (R): In a Savings Bank Account any amount can indeed be deposited at any time — true.
But: R describes a completely different account and does not explain why a sinking fund uses fixed periodic deposits.
Marking Scheme
- 11 mark: correct option (B), recognising both statements are true but logically unrelated.
- 2No partial credit; a single code is expected.
Hint
Both statements are individually true, but ask: does a savings account's flexibility actually explain a sinking fund's fixed deposits?
Quick Oral Answer
Both statements are true but the Reason does not explain the Assertion, because a sinking fund requires fixed regular deposits like an annuity, while a savings account's freedom to deposit any amount anytime is a separate, unrelated fact.
Analysis & Explanation
This item contrasts the defining feature of a sinking fund with that of an ordinary savings account.
Assertion (A) is true: A sinking fund is a fund created by setting aside a fixed, equal instalment at regular intervals (like an annuity). These instalments earn interest and grow to a required future amount, typically to replace an asset or repay a debt.
Reason (R) is true: A Savings Bank Account genuinely allows deposits of any amount at any time — it is flexible and has no fixed instalment requirement.
Why R does not explain A: The two statements describe opposite features of two different products. A sinking fund's fixedness is not caused by, or explained by, the flexibility of a savings account. In fact they contrast rather than support each other, so R is a true but unrelated statement.
Correct code — (B). Both true, but Reason is not the correct explanation of the Assertion.
Exam trap: In assertion–reason questions, a Reason can be perfectly true yet still be the wrong explanation — always check the logical link, not just the truth of each line.
Common Mistakes
- 1Marking (A) because both statements are true, without checking whether R logically explains A.
- 2Thinking R is false because it seems unrelated — flexibility of a savings account is a genuine, true fact.
- 3Confusing a sinking fund with a savings account, when a sinking fund is actually an annuity-type fixed-instalment scheme.
Interesting Facts
Sinking funds are used by companies and governments to gradually accumulate money for repaying large bonds or replacing costly machinery, avoiding a sudden financial burden at maturity.
A sinking fund is mathematically an annuity: the fixed periodic deposit is exactly the annuity instalment whose future value equals the target amount.
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Frequently Asked Questions
What exactly is a sinking fund?
A sinking fund is a fund into which a fixed amount is deposited at regular intervals so that, with accumulated interest, it grows to a required sum by a target date. It is commonly used to replace an asset or repay a bond or loan, and behaves mathematically like an annuity.
Why can a true Reason still not explain the Assertion?
In assertion–reason questions, correctness of each statement is judged separately from the logical link between them. Here both facts are true, but the flexibility of a savings account has no causal or explanatory connection to why sinking funds use fixed periodic deposits, so the Reason is true yet not the explanation.