MONETARY POLICY Definition

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MONETARY POLICY is U.S. Federal Reserve actions to influence the availability and cost of money and credit as a means of helping to promote high employment, economic growth, price stability and a sustainable pattern of inter­national transactions. Tools of monetary policy include open market operations, adjustments in reserve require­ments and changes in the discount rate.

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DEPRECIATION ALLOCATION is the allocation of the cost of capital expenditures so that revenue is matched with expenses for items that will last more than one year (land is not depreciable). The methodology is to allocate plant and equipment cost to expense through the use of accelerated, straight line and units of production amortization methods; as well as the disposal of assets; and, repairs and betterments to assets.

SINKING FUND is a sum set apart periodically from the income of a government or a business and allowed to accumulate in order ultimately to pay off a debt. A preferred investment for a sinking fund is the purchase of the governments or firms bonds that are to be paid off. Usually the fund is administered by a trustee.

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