Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

Premium on redemption of debenture is generally provided at the time of __________.

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. issue of debentures

  2. redemption of debentures

  3. every year

  4. after 10 years

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Correct Option: A

Hariom Industries Ltd. purchased a plant for Rs. 100,000 payable Rs. 37,000 in cash and balance by issue of 10% debentures of Rs. 100 each at a premium of 10%. The vendor will be issued____ debentures.

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. 630 of Rs. 100 each

  2. 572.72 of Rs. 100 each

  3. 700 of Rs. 100 each

  4. 600 of Rs. 100 each

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Correct Option: B

Debentures cannot be redeemed at ___________.

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. premium

  2. discount

  3. par

  4. more than 10% premium

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Correct Option: B

Premium received on Issue of Debentures is?

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. Capital profit

  2. Revenue profit

  3. Both A and B

  4. None of these

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Correct Option: A

A company issued 1000, 12% debentures of Rs. 100 at par redeemable at 10% premium. 12% stands for ______.

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. rate of dividend

  2. rate of tax

  3. rate of interest

  4. rate of TDS

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Correct Option: C

Premium received on issue of Debenture is shown in ____________.

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. Profit and Loss A/c

  2. Balance Sheet

  3. Contingent Assets

  4. Notes to Accounts

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Correct Option: B
Explanation:

Premium received on issue of debentures is capital profit, therefore, this will appear in the liabilities side of the Balance Sheet under the head 'Reserve and Surplus'.

Which of the following is false?

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. Equity is owner's estate and the debenture is a debt

  2. Rate of interest on debentures is fixed

  3. Debenture holders get preferential treatment over the equity holders at the time of liquidation

  4. Interest on debentures is an appropriation of profits

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Correct Option: D

A company issues $14\%$ debentures of Rs. $10,00,000$ at a discount of $10\%$. The discount allowed will be treated in the account books as.

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. Capital expenditure

  2. Revenue expenditure

  3. Deferred revenue expenditure

  4. Capital loss

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Correct Option: D

Interest payable on debentures is?

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. An appropriation of profits of the company

  2. A charge against profit of the company

  3. Transferred to sinking fund investment account

  4. Transferred to general reserve

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Correct Option: B

As per the Companies Act, "Interest accrued but not due on debentures" should be shown.

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. Under Debentures

  2. As Current Liabilities

  3. As Miscellaneous Exps.

  4. As a Current Asset.

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Correct Option: B