4. Explain fully the relation of the sinking fund to profits.
5. In what four ways may the sinking fund be handled on the balance sheet? Explain the meaning of each.
6. How should the sinking fund assets be shown on the balance sheet?
7. Explain fully the entries needed to book the sinking fund transactions: (a) The origin of the fund. (b) The trustee’s periodic report. (c) The redemption of bonds and final disposition of the fund.
8. Discuss fully the relation between the reserve for depreciation and the sinking fund.
Chapter XXVI
1. Is the profit and loss a statement of fact or of opinion? Explain.
2. For what purposes is the periodic profit and loss summary inadequate? Discuss fully.
3. Give the arguments for inclusion of interest as an item of manufacturing cost.
4. Give the arguments against its inclusion. If its inclusion is allowed, how must it be booked?