Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

W Ltd. issued $20,000$, $8\%$ 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. $40,000$

  2. Rs. $10,000$

  3. Rs. $20,000$

  4. Rs. $8,000$

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Correct Option: D

Debentures of a company can 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. For cash

  2. For consideration other than cash

  3. As a collateral security

  4. Any of the above

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Correct Option: D

On issue of debentures as a collateral security, which account is creadited?

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. Debentures Account

  2. Bank Loan Account

  3. Debenture holdings Account

  4. Debenture Suspense Account

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Correct Option: A
Explanation:

Collateral security means security provided to the lender over and above the prime or principal security. Collateral security is to be realized only when the principal security fails to pay the amount of loan.
Debentures Suspense A/c                          Dr.
To Debentures A/c

Which of the following is not a characteristic of Bearer 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. These are treated as negotiable instruments.

  2. Their transfer requires a deed of transfer.

  3. These are transferable by mere delivery

  4. The interest on it is paid to the holder.

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Correct Option: B

Which debentures are secured by a charge -

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. Debentures which are convertible on or after $18$ months

  2. Non - convertible debentures which are redeemable on or after $18$ months

  3. Debentures which are non - convertible on or after $18$ months

  4. None of these

Show answer
Correct Option: B
Explanation:

If debentures are non-convertible, they are paid at the time of redemption. Debentures which are non-convertible and redeemable after a period of more than 18 months must be secured by creating a charge against the property of the company.

In Balance Sheet of a Company, Interest accrued but not due on debentures appears under the head -

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. Share Capital

  2. Reserves & Surplus

  3. Current Liabilities

  4. Non - Current Liabilities

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Correct Option: C

X Ltd. purchased land and building for Y. Ltd for a book value of Rs$4,00,000$. The consideration was paid by issue of $12\%$ Debentures of Rs$100$ each at a discount of $20\%$. The debentures account is credited with -

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. $Rs 5,20,000$

  2. $Rs 5,00,000$

  3. $Rs 4,80,000$

  4. $Rs 3,20,000$

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Correct Option: B

Loss on Issue of Debentures Account 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. Personal Account

  2. Real Account

  3. Nominal Account

  4. None of these

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Correct Option: C

In the Balance Sheet of a company Debentures account appears under the head:

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. Share Capital

  2. Reserves & Surplus

  3. Secured Loans

  4. Miscellaneous Expenditure

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Correct Option: C

The underwriting commission in case of issue of debentures can't exceed _______.

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. $2\%$

  2. $2.5\%$

  3. $3\%$

  4. $5\%$

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Correct Option: B