Tag: accounting effects for redemption of debentures

Questions Related to accounting effects for redemption of debentures

The balance of the debentures sinking fund after redemption of debentures is transferred to ___________________.

elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

  1. Debentures Account

  2. Profit and Loss Account

  3. General Reserve Account

  4. None of the above

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Correct Option: C

When debenture sinking fund is created ___________________.

elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

  1. Both the accounts involved belong to current category

  2. Both the accounts involved belong to non-current category

  3. One is current item and another is non-current category

  4. None of these

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Correct Option: B

Which is not the salient feature of sinking fund method?

elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

  1. Interest is an integral part

  2. Amount released is affected by fluctuations in interest rate

  3. Investment in securities

  4. Premium is paid in advance at the beginning of year

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Correct Option: D

A check returned by bank marked "NSF" means that:

elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

  1. Bank can't verify your identify

  2. There are not sufficient funds in your account

  3. Check has been forged

  4. Check can't be cashed being illegal

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Correct Option: B

The following is common in sinking fund method:

elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

  1. The amount received at the end of the life of an asset is fixed

  2. The amount received at the end of the life of an asset is not fixed

  3. The amount received at the beginning of the life of an asset is fixed

  4. None of the above

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Correct Option: B

Under redemption by _________, debentures can also be redeemed by converting them into shares or new debentures.

elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

  1. purchase

  2. conversion

  3. payment

  4. payment in lump sum

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Correct Option: B

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

elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption 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

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Correct Option: D

Which is not the salient feature of sinking fund method?

elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

  1. Interest is an integral part

  2. Amount released is affected by fractionations in interest rate

  3. Investment in securities

  4. Premium is paid in advance at the beginning of year

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Correct Option: D

Interest is credited to profit and loss account in ________________.

elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

  1. annuity method

  2. sinking fund method

  3. insurance policy method

  4. all of the above

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Correct Option: B

Identify the statement which is common in sinking fund method from the following.

elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

  1. The amount received at the end of the life of an asset is fixed

  2. The amount received at the end of the life of an asset is not fixed

  3. The amount received at the beginning of the life of an asset is fixed.

  4. None of the above

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Correct Option: B