Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

From the point of view of security, the debentures are classified as -

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

  1. Secured and unsecured Debentures

  2. Redeemable Debentures and Irredeemable Debentures

  3. Convertible Debentures and Non-convertible Debentures

  4. Registered Debentures and Bearer Debentures

Show answer
Correct Option: A
Explanation:

Debentures can be secured in nature, it may be unsecured in nature. A secured debenture is secured by the charge on some asset or set of assets which is known as secured or mortgage debenture and another when it is issued solely on the credibility of the issuer is known as the naked or unsecured debenture. 

Debenture Trust Deed is created by -

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

  1. The company

  2. The Trustees

  3. The SEBI

  4. The company Law Tribunal

Show answer
Correct Option: A
Explanation:

The document created by the company, whereby trustees are appointed to protect the interest of debenture-holders before they are offered for public subscription is known as Debenture Trust Deed.

Debenture Trust Deed must be executed within-

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

  1. $1$ month of the closure of issue

  2. $3$ months of the closure of issue

  3. $6$ months of the closure of issue

  4. $1$ month before the opening of issue

Show answer
Correct Option: C
Explanation:

 A trust deed shall be executed by the issuer company in favour of the debenture trustees within six months of the closure of the issue.

Debenture contains provisions as regards -

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

  1. the repayment of principal only

  2. the payment of interest at a fixed rate only

  3. the payment of interest at a fluctuating rate only

  4. the repayment of principal and the payment of interest at a fixed rate.

Show answer
Correct Option: D
Explanation:

Debenture is a written instrument acknowledging a debt to 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.

In Balance Sheet of a Company, Interest accrued and due on debentures appears under the head -

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

  1. Share Capital

  2. Reserves & Surplus

  3. Current Liabilities

  4. Non-Current Liabilities

Show answer
Correct Option: C

Who is not eligible to be appointed as Debenture Trustee:

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

  1. A Scheduled Bank

  2. A Public Financial Institution

  3. An Insurance Company

  4. A partnership firm carrying on banking Business

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Correct Option: D

Debenture Trustess are to be appointed in case of issue of:

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

  1. All Debentures

  2. Debentures with maturity of more than $18$ months

  3. Debentures with maturity of lessthan $18$ months

  4. Convertible Debentures

Show answer
Correct Option: B
Explanation:

No Public Issue/Rights Issue of Debentures shall be made by a company unless it has appointed one or more Debenture Trustees for such debentures whereas under SEBI guidelines, appointment of Debenture Trustees is compulsory only in case of debentures with maturity of 18 months or more.

Consider the following items.
1. Debentures  2. Prepaid rent
3. Accrued interest   4. Bank overdraft
Liabilities would include

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

  1. 2, 3 and 4

  2. 1, 2 and 3

  3. 1 and 4

  4. 1, 2, 3 and 4

Show answer
Correct Option: C

Debentures issued as collateral security for Rs 10,000 will be debited to ________________.

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

  1. Debentures suspense A/c

  2. Bank A/c

  3. Debentures A/c

  4. None of the above

Show answer
Correct Option: A

First debentures and second debentures would denote a classification of debentures on the basis of ______________.

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

  1. Security

  2. Redemption

  3. Record

  4. Priority

Show answer
Correct Option: D