Accounting for Debentures Test

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Accounting for Debentures Test - 8

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Weekly Quiz Competition

Question 1
1 / -0

Vinod Limited issued 20,000; 11% Debentures of ₹100 each at a premium of 20% redeemable at a premium of 5% after 5 years. Calculate the amount payable as premium on redemption of debentures?

A
1,20,000

B
2,00,000

C
1,00,000

D
4,00,000

Solution

The amount payable in the form of premium on redemption will be Premium payable on redemption = 100 × 5/100 = 5 20,000 debentures × 5 = 1,00,000
Question 2
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Vinod Limited redeem its 500 debentures of 100 each by purchasing these debentures at ₹94 from the open market for cancellation. Calculate the profit on cancellation of own debentures.

A
2000

B
2500

C
5000

D
3,000

Solution

Profit on cancellation of own debentures will be ₹3,000. Profit per debentures is = 100 – 94 = 6 500 Debentures×6 = 3,000
Question 3
1 / -0

What journal entry will take place when a company purchases its own debentures from the open market?

A
Own Debentures A/c Dr. To Bank A/c

B
Bank A/c Dr. To Debenture Application A/c

C
Own Debentures A/c Dr. To Debenture A/c

D
Bank A/c Dr. To Debentures A/c

Solution

When company purchases its own debentures from the market: Own Debentures A/c Dr. To Bank A/c as Payment made at the purchasing of own debentures.
Question 4
1 / -0

A Debenture of a company represents

A
Debt

B
Shareholders Fund

C
Assets

D
Capital

Solution

A debenture of a company represents debt of the company. Amount raised through debentures is treated as long term borrowings.
Question 5
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Which of the following is not correct?

A
Debenture of the company is issued with a fixed rate of interest

B
Debenture may or may not be secured

C
Debentures can be issued at maximum 25% discount

D
Debenture is issued under the common seal of the company

Solution

Following Statements are correct Except discount statement:
•Debenture is issued under the common seal of the company
•Debenture of the company is issued with a fixed rate of interest
•Debenture may or may not be secured
Question 6
1 / -0

Which of the following is not a Personal Account?

A
Debenture Account

B
Assets Account

C
Debenture Allotment A/c

D
Debenture Application A/c

Solution

Following Accounts are personal accounts:
(a)Debenture Account
(b)Debenture Allotment Account
(c)Debenture Application Account
Note: Asset account is real account.
Question 7
1 / -0

Which of the following is correct?

A
Interest on debentures is paid before paying any dividend

B
Debentures cannot be issued as ‘Collateral Security’

C
Debentures can be issued in cash only

D
Debentures cannot be issued at discount

Solution

Interest on debentures is paid before paying any dividend. Following statement are false:
•Debentures cannot be issued as ‘Collateral Security’
•Debentures can be issued in cash only
•Debentures cannot be issued at discount

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Re-Attempt Weekly Quiz Competition

Accounting for Debentures Test - 8

Result

Accounting for Debentures Test - 8

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SHARING IS CARING

Question 1

1,20,000

2,00,000

1,00,000

4,00,000

Solution

Question 2

2000

2500

5000

3,000

Solution

Question 3

Own Debentures A/c Dr. To Bank A/c

Bank A/c Dr. To Debenture Application A/c

Own Debentures A/c Dr. To Debenture A/c

Bank A/c Dr. To Debentures A/c

Solution

Question 4

Debt

Shareholders Fund

Assets

Capital

Solution

Question 5

Debenture of the company is issued with a fixed rate of interest

Debenture may or may not be secured

Debentures can be issued at maximum 25% discount

Debenture is issued under the common seal of the company

Solution

Question 6

Debenture Account

Assets Account

Debenture Allotment A/c

Debenture Application A/c

Solution

Question 7

Interest on debentures is paid before paying any dividend

Debentures cannot be issued as ‘Collateral Security’

Debentures can be issued in cash only

Debentures cannot be issued at discount

Solution

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