Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

Discount on issue of debentures is a.

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. Revenue loss to be charged in the year of issue

  2. Capital loss to be written off from capital reserve

  3. Capital loss to be written off over the period of the debentures

  4. Capital loss to be shown as goodwill

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Correct Option: C

W Ltd. issued $40,000$, $8\%$ debentures of Rs. $10$ each at par, which are redeemable after $5$ years at a premium of $20\%$. The amount of loss on redemption of debentures to be written off every year will be.

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. Rs. $80,000$

  2. Rs. $20,000$

  3. Rs. $8,000$

  4. Rs. $16,000$

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Correct Option: D

How many debentures will a company be required to issue for satisfying the purchase consideration of Rs. $28,80,000$, if debentures of Rs. $100$ are issued at a premium of Rs. $20$ per debenture?

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. $24,000$

  2. $28,800$

  3. $36,000$

  4. $32,000$

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Correct Option: A

Which of the following statement is false?

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. A company can issue convertible debentures

  2. Debentures cannot be secured

  3. A company can issue redeemable debentures

  4. Debentures have no right to participate in profits over and above their fixed interest

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Correct Option: B

Which of the following is true regarding 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. They can be issued for cash

  2. They can be issued for a consideration other than cash

  3. They cannot be issued as collateral security

  4. Both (a) and (b)

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Correct Option: D

Which of the following is false?

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. A company can issue redeemable debentures

  2. A company can issue debentures with voting rights

  3. A company can issue convertible debentures

  4. A company can buy its own debentures and shares

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Correct Option: B

The following journal entry appears in the books of X Co. Ltd. The debentures have been issued at.

Dr. (Rs.) Cr. (Rs.)
Bank A/c $96,000$
Loss on issue of debentures A/c $10,000$
To $8\%$ debentures A/c $1,00,000$
To premium on redemption of debentures A/c $6,000$
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. Discount of $4\%$

  2. Discount of $6\%$

  3. Premium of $6\%$

  4. Discount of $10\%$

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Correct Option: A

Which of the following is false regarding 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. They can be issued to vendors

  2. They can be issued for consideration other than cash

  3. They can be issued as collateral security

  4. They can be issued in lieu of dividends

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Correct Option: D

Debenture premium cannot be used to.

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. Write off the discount on issue of shares or debentures

  2. Write off the premium on redemption of shares or debentures

  3. Pay dividends

  4. Write off capital loss

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Correct Option: C

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 cash A/c and credit the loan A/c for which security is given

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

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Correct Option: C
Explanation:

When debentures are issued as a collateral security there are two treatments in the accounting books. 

One of the methods is where no journal entry is made in the account books at the time of issue of such debentures. Hence, only the entry of loan is to be passed.

Hence, C is the correct option.