Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

When debentures are issued as collateral security, the final entry for recording the transaction in the books is ______.

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. Credit Debentures A/c and debit Cash A/c

  2. Debit Debentures Suspense A/c and credit Cash A/c

  3. Debit Debentures Suspense A/c and credit Debentures A/c

  4. Debit Cash A/c and credit the loan A/c for which security is given

Show answer
Correct Option: D

What is the journal entry for issuing debentures as collateral security?

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash
  1. CashDebentures Dr.  Cr. 
  2. CashDebentures Suspense Dr.  Cr. 
  3. Debentures SuspenseDebenture Dr.  Cr. 
  4. LoanDebentures Dr.  Cr. 
Show answer
Correct Option: C

Monika Ltd. purchased land and building worth Rs. 28,80,000 and in lieu issued debentures of Rs. 100 each at a discount of $4\%$. What is the number of debentures issued?

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. 28,000

  2. 30,000

  3. 32,000

  4. 35,000

Show answer
Correct Option: B

V Kare Ltd. issued R. 1,00,000, $7%$ debentures at $5\%$ discount redeemable after 10 years at premium of $5\%$.T he journal entry is:

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash
  1. Bank Account Discount on Debentures accountDebentures 95,000   5,000 1,00,000
  2. Bank Account Discount on Debentures accountDebentures 1,00,000    5,000 1,05,000
  3. Bank Account Discount on Debentures accountDebenturesPremium of redemption of debentures 1,00,000    5,000 1,00,000    5,000
  4. Bank Account Loss on the issue of debenturesDebenturesPremium of redemption of debentures 95,000 10,000 1,00,000    5,000
Show answer
Correct Option: D

Bikano Industries Ltd. purchased a plant for Rs. 100,000 payable Rs. 37,000 in cash and balance by issue of 11% debentures of Rs. 100 each at a discount of 10%. The vendor will be issued ______.

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. 630 debentures of Rs. 100 each

  2. 700 debentures of Rs. 100 each

  3. 770 debentures of Rs. 100 each

  4. 600 debentures of Rs. 100 each

Show answer
Correct Option: B

Debentures cannot be issued at a discount.

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. True

  2. False

Show answer
Correct Option: B

On issue of Debentures, Account to be credited is?

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. Debenture Capital

  2. Debenture

  3. Loan

  4. Capital

Show answer
Correct Option: B

When debentures are issued as collateral security, no amount is received for debentures.

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

When loan is taken from Bank or Financial Institution, debentures may be issued as collateral security. Any cash is not received against these debenture. On default of repayment of loan, loan may be converted into debentures by Bank/Financial Institution.

Unless written off, the loss on issue of debentures is shown.

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. On the assets side of Balance Sheet

  2. On the debit side of Profit and Loss Account

  3. By way of deduction from the amount of debentures

  4. On the liabilities side of Balance Sheet

Show answer
Correct Option: A

If debentures are issued as consideration for purchase of any fixed asset, the entry is?

book keeping and accountancy company accounts - issue of debentures issue of debentures for consideration other than cash types of debentures issue of debentures at par, premium, discount, collateral security and for consideration other than cash

  1. Debit Asset A/c; Credit Vendor A/c

  2. Debit Asset A/c; Credit Bank A/c

  3. Debit Asset A/c; Credit Debentures A/c

  4. Debit Debenture A/c; Credit Asset A/c

  5. Debit Debenture A/c; Credit Vendors A/c

Show answer
Correct Option: D