human
Can you explain the difference between a depreciation fund and a sinking fund?
assistant
Depreciation funds are used to cover the costs associated with depreciation of physical assets such as buildings and equipment, while sinking funds are money set aside from income or profits to pay for future large expenses. A depreciation fund may be used to make regular payments for the depreciation of an asset, or for purchases of replacement assets; a sinking fund, on the other hand, is typically used to make a large, one-time payment on a particular obligation.