Sinking fund refers to a special fund set up by bond issuers to ensure the maturity or non-maturity of various bonds issued. In financial valuation, sinking fund refers to the amount of annuity that should be paid at the end of each year in order to make the final value of annuity reach the set amount. Under normal circumstances, the repayment of bonds is paid from the issuer's future income, but in order to ensure the maturity of bonds or the holder's request for early payment under special circumstances, some governments or companies have also set up special sinking funds. The funds for repaying the principal and interest of the national debt are generally arranged from the national budget.

There are two main ways to form the company's sinking fund: 1, which is drawn according to a fixed amount or a certain proportion of issued bonds; 2, according to a certain proportion of after-tax profits or sales revenue. Some companies must set up sinking funds when issuing bonds according to relevant laws and regulations, and some companies include setting up sinking funds as one of the issuance conditions in bond issuance contracts to enhance the attractiveness of bonds issued to investors.

Accounting method of sinking fund: Enterprises that set up sinking fund should add _ _ foreign currency sinking fund account to the account of "bank deposit" for separate accounting. This account is also a foreign currency account, and its balance needs to be adjusted according to the ending exchange rate.

When an enterprise uses special deposits to repay its foreign debt, it shall debit the relevant debt account according to the RMB amount converted at the market exchange rate and credit the "bank deposit-foreign currency debt repayment fund account". At the end of the period, the foreign currency amount of this account is adjusted in the same way as other foreign currency accounts.