Tag: meaning of debentures

Questions Related to meaning of debentures

Which of the following statements is true?

  1. A debenture holder is an owner of the company.

  2. A debenture holder can get his money back only on the liquidation of the company.

  3. A debenture issued at a discount can be redeemed at a premium.

  4. A debenture holder receives interest only in the event of profits.


Correct Option: C

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

  1. Debit asset A/c; Credit vendor A/c

  2. Debit asset A/c; Credit bank A/c

  3. Debit asset A/c; Credit debenture A/c

  4. Debit debenture A/c; Credit asset A/c


Correct Option: C

Discount on issue of debentures is a:

  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 tenure of the debenture

  4. capital loss to be shown as goodwill


Correct Option: C

Which of the following statements is false?

  1. Debentures can be issued for cash or consideration other than cash or as collateral security

  2. Debentures can not be forfeited for non-payment of call money.

  3. A company can buy its own debentures.

  4. A debentures issued at a discount can be redeemed at a premium.


Correct Option: B

Which of the following is false?

  1. A company can issue redeemable debentures

  2. A company can issue debentures with voting rights

  3. A company can buy its own shares

  4. A company can buy its own debentures


Correct Option: B

Which of the following is false?

  1. A company can issue bearer debentures.

  2. A company can issue convertible debentures.

  3. A company can issue redeemable debentures.

  4. A company can issue debentures with voting rights.


Correct Option: D

The underwriting commission in the case of issue of debentures cannot exceed _______________.

  1. 2%

  2. 2.5%

  3. 3%

  4. 5%


Correct Option: B

The following entry appears in the bools of Vikas Ltd 

BankA/c 1,90,000
Loss on issue of Debenture A/c 26,000
To 9% Debentures A/c 2,00,000
To Premium on Redemption of Debentures A/c 16,000
Debentures have been issued at a discount of 
  1. 10%

  2. 7%

  3. 6%

  4. 5%


Correct Option: D

Debentures Account is a -

  1. Personal Account

  2. Real Account

  3. Nominal Account

  4. None of these


Correct Option: A
Explanation:

Debenture A/c is a Personal A/c as it reflects the liability of the company towards debentureholders'.

An unsecured bond that provides no lien against property as security for bond obligation is classified as _____________.

  1. secured bond

  2. debenture

  3. obligation bond

  4. specific bond


Correct Option: B