The correct answer is C. Sinking fund account.
A sinking fund is a fund that is set aside to pay off a debt or liability. The balance of the sinking fund investment account is transferred to the sinking fund account when the investment is sold. This ensures that the fund has enough money to pay off the debt or liability when it comes due.
Option A, Profit and loss account, is incorrect because the sinking fund account is not a profit and loss account. The sinking fund account is a separate account that is used to track the money that is being set aside to pay off a debt or liability.
Option B, Capital reserve account, is incorrect because the sinking fund account is not a capital reserve account. A capital reserve account is an account that is used to track the money that is being set aside for a specific purpose, such as to pay for a new building or to cover unexpected expenses.
Option D, Debentures account, is incorrect because the sinking fund account is not a debentures account. A debentures account is an account that is used to track the money that is being borrowed from investors.
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