Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

In the event of liquidation of the company the debenture holders have prior right for __________.

book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

  1. interest

  2. principal amount

  3. both (a) & (b)

  4. none of the above

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Correct Option: D

When a company is not earning profits, then which of the following securities proves a burden on the finances of the company?

book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

  1. Equity Shares

  2. Preference Shares

  3. Redeemable Preference Shares

  4. Debentures

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Correct Option: D

Which of the following is false?

book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

  1. Equity is owners' stake and the debentures 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

Which of the following securities put a burden on the finance of a company, when there are no profits?

book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

  1. Equity shares

  2. Preference shares

  3. Debentures 

  4. All of these

Show answer
Correct Option: C

Which of the following statement correctly describes debentures?

book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

  1. Income bonds that require interest payments only when earnings permit.

  2. Income bonds that are not require interest payments  when earnings permit.

  3. Subordinated debt and rank behind convertible bonds.

  4. A form of lease financing similar to equipment trust certificates.

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Correct Option: C

Which of the following statement correctly describes debentures?

book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

  1. Income bonds that require interest payments only when earnings permit

  2. Income bonds that are not require interest payments only when earnings permit

  3. Subordinated debt and rank behind convertible bonds

  4. A form of lease financing similar to equipment trust certificates

Show answer
Correct Option: C

In debenture account ________ is to be mentioned.

book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

  1. Name of the debenture

  2. Rate of interest

  3. Date of issue debenture

  4. All of the above

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Correct Option: B

Which of the following items is not an appropriation of profit for a limited company_______.

book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

  1. Preference shares dividend payable

  2. Ordinary dividend payable by the company

  3. Income tax payable by the company

  4. Debenture interest payable

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Correct Option: D

Debenture is -

book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

  1. a written instrument acknowledging a debt written by its holder

  2. an oral acknowledgement of debt by a company

  3. a written instrument acknowledging a debt written by its company

  4. None of these

Show answer
Correct Option: C
Explanation:

Debenture is a written instrument acknowledging a debt under the common seal of the company. It contains a contract for repayment of principal after a specified period or at intervals or at the option of the company and for payment of interest at a fixed rate payable usually either half-yearly or yearly on fixed dates.

Debentures can be ________.
I. Mortgage Debentures or Simple Debentures.
II. Registered Debentures or Bearer Debentures.
III. Redeemable Debentures or Non- Convertible Debentures.
IV. Convertible Debentures or Non- Convertible Debentures.

book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

  1. Both (I) and (II) above

  2. Both (I) and (III) above

  3. Both (II) and (III) above

  4. All of (I), (II), (III) and (IV) above.

Show answer
Correct Option: D