Tag: procedure for issue of debentures

Questions Related to procedure for issue of debentures

Premium received on Issue of Debentures is?

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. Capital profit

  2. Revenue profit

  3. Both A and B

  4. None of these

Show answer
Correct Option: A

A company issued 1000, 12% debentures of Rs. 100 at par redeemable at 10% premium. 12% stands for ______.

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. rate of dividend

  2. rate of tax

  3. rate of interest

  4. rate of TDS

Show answer
Correct Option: C

Premium received on issue of Debenture is shown in ____________.

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. Profit and Loss A/c

  2. Balance Sheet

  3. Contingent Assets

  4. Notes to Accounts

Show answer
Correct Option: B
Explanation:

Premium received on issue of debentures is capital profit, therefore, this will appear in the liabilities side of the Balance Sheet under the head 'Reserve and Surplus'.

Which of the following is false?

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. Equity is owner's estate and the debenture is a debt

  2. Rate of interest on debentures is fixed

  3. Debenture holders get preferential treatment over the equity holders at the time of liquidation

  4. Interest on debentures is an appropriation of profits

Show answer
Correct Option: D

A company issues $14\%$ debentures of Rs. $10,00,000$ at a discount of $10\%$. The discount allowed will be treated in the account books as.

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. Capital expenditure

  2. Revenue expenditure

  3. Deferred revenue expenditure

  4. Capital loss

Show answer
Correct Option: D

Interest payable on debentures is?

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. An appropriation of profits of the company

  2. A charge against profit of the company

  3. Transferred to sinking fund investment account

  4. Transferred to general reserve

Show answer
Correct Option: B

As per the Companies Act, "Interest accrued but not due on debentures" should be shown.

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. Under Debentures

  2. As Current Liabilities

  3. As Miscellaneous Exps.

  4. As a Current Asset.

Show answer
Correct Option: B

When debentures are issued at discount. Such discount ____________.

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. may be written off against revenue profits

  2. may be written off against capital profits

  3. Both A & B

  4. shown on debit side of balance sheet

Show answer
Correct Option: C

In debenture account _________ is to be mentioned.

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. Name of the debenture

  2. Rate of interest

  3. Date of issue of debenture

  4. All of the above

Show answer
Correct Option: B

How many debentures will a company be required to issue for satisfying the purchase considerations of $Rs. 28,80,000$ if the debenture is of $Rs. 80$ and is issued at a premium of $Rs. 10$ per debenture?

book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

  1. $Rs. 28,800$

  2. $Rs. 30,800$

  3. $Rs. 32,200$

  4. $Rs. 32,000$

Show answer
Correct Option: D