Accounting for Debentures
17 Board Accountancy previous year questions on Accounting for Debentures — options free on every question; 2 include the answer & explanation free, the rest unlock with PYQ Pass.
Debenture is the part of :
Long term Borrowing
Correct Answer:
(B) Long-term Borrowings
Why This Answer Is Correct?
Debentures represent long-term loans taken by the company. Debenture holders are creditors, not owners. Therefore, debentures are shown under Long-term Borrowings on the liabilities side of the Balance Sheet.
Why Other Options Are Incorrect?
(A) Share Capital — Incorrect
Share capital belongs to shareholders (owners), not to debenture holders.
(C) Owners’ Capital — Incorrect
Owners’ capital represents shareholders’ funds, whereas debentures are borrowed funds.
(D) None of these — Incorrect
Since debentures are part of long-term borrowings, this option is wrong.
Rate of Interest on debenture is :-
Fixed rate
Correct Answer:
(C) Fixed rate
Why This Answer Is Correct?
Debentures carry a fixed rate of interest which is decided at the time of issue and remains the same throughout the life of the debentures, regardless of the company’s profit or loss.
Why Other Options Are Incorrect?
(A) 12% per annum — Incorrect
This is only an example of a rate. Debentures can be issued at different rates, not always at 12%.
(B) 20% per annum — Incorrect
This is also just a specific rate, not a general characteristic of debentures.
(D) 15% per annum — Incorrect
Like the other percentages, this is not universally applicable to all debentures.
Debentures which are transferred by mere delivery are called
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If a company issue ₹1,00,000,9% debentures of ₹100 each at discount of 5% but redeemable at premium of 5% then what amount will be debited to Loss on Issue of Debentures Account?
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Debenture suspense is shown in the balance sheet as:
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In case of issue of debentures as a collateral security for the loan taken from the bank, which account will be debited ?
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Debentures issued for consideration other than cash includes, debentures :
(A) Issued to bank as additional security
(B) Issued to vendor
(C) Issued to Public
(D) Issued to creditor
(E) Issued for cash
Choose the correct answer from the options given below :
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What is the nature of Debenture application account ?
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Discount on issue of 8% debentures is shown in the balance sheet as:
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Consideration of debenture is :-
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AB&Co. purchased assets worth ₹28,80,000 from vendor. It issued debentures of ₹100 each at a discount of 4% in full satisfaction of the purchase consideration. The number of debentures issued to vendor is:
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Deep Ltd. issued 10,00,000, 7% debentures of Rs. 100 each at a discount of 4%, redeemable after 5 years at a premium of 6%. Loss on the issue of debenture is
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Debenture holders are the
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Interest payable on debentures is
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Choose the correct statement in respect of "Loss in Issue of Debentures".
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For a company, premium on issue of debenture is :-
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Discount on issue of debentures is :-
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