In Sinking Fund for redemption of Debentures Account, the amount is transferred every year from

The correct answer is Profit and Loss Account.

Key PointsDebentures – Marketable security (a type of Loan) issued by a business or other organization to raise money for long-term activities and growth and yielding a fixed rate of interest. Debentures can be issued at par, at premium and at discount.

Important PointsSinking Fund - 

• A sinking fund is a specific kind of fund that is established with the intention of paying off debt.
• The account holder routinely sets aside a specified sum of money and utilizes it only for that reason.
• Corporations frequently use it for bonds and deposit funds to purchase issued bonds or portions of bonds before the maturity date.
• Each year, profits are used to fund a sinking fund or debt redemption fund in an equal amount.
• After debentures are redeemed, the remaining funds in the Debentures Sinking Fund are moved to the General Reserve account.
• It is transferred to the general reserve account since it is the portion of the redeemed debenture proceeds that is held apart.

Thus, In Sinking Fund for redemption of Debentures Account, the amount is transferred every year from Profit and Loss Account.