Issue And Redemption Of Debentures(12th Grade > Accountancy ) Questions and answers for exam Preparation

12th Grade > Accountancy

ISSUE AND REDEMPTION OF DEBENTURES MCQs

Total Questions : 30 | Page 1 of 3 pages

Question 1.

Debentures can be issued at -

Par
Premium
Discount
All of these

Discuss Question

Answer: Option D. -> All of these
:
D

Debentures can be issued at par, premium or discount.

Question 2.

When debentures are to be redeemed at premium an extra entry has to be made at the time of debentures, which a/c should be credited in this entry?

Loss on issue of Debentures A/c
Premium on Redemption of Debentures A/c
Bank A/c
Debenture Holder's A/c

Discuss Question

Answer: Option B. -> Premium on Redemption of Debentures A/c
:
B

When debentures are to be redeemed at premium an extra entry has to be made at the time of debentures, Premium on Redemption of Debentures A/c should be credited in this entry

Question 3.

Debentures can be redeemed :

By issue of new shares
By existing resources
By accumulated profits
All of these

Discuss Question

Answer: Option D. -> All of these
:
D

Debentures can be redeemed by issue of new shares, existing resources and accumulated profits

Question 4.

Which of the following statement is false?

Debentures can be issued at par
Debentures can be redeemed at premium
Debentures amount can be called in installments
Debentures cannot be issued at discount

Discuss Question

Answer: Option D. -> Debentures cannot be issued at discount
:
D

Debentures cannot be issued at discount is a false statement.
The correct statement is -
Debentures can be issued at discount.

Question 5.

Debentures can be redeemed :

By annual drawings
By purchase in the open market
By conversion
All of these

Discuss Question

Answer: Option D. -> All of these
:
D

Debentures can be redeemed by annual drawings, purchase in the open market and conversion

Question 6.

Loss on issue of debentures is written off :

In the year of the issue of debentures
During the life of debentures
Within 3 years of the issue of debentures
In the year of redemption of debentures

Discuss Question

Answer: Option B. -> During the life of debentures
:
B

Loss on issue of debentures is written off during the life of debentures

Question 7.

India Steel Ltd., issued 6,000 12% Debentures of Rs. 100 each at par, redeemable at 5% premium. What is the amount of premium?

Rs 20,000
Rs 50,000
Rs 25,000
Rs 30,000

Discuss Question

Answer: Option D. -> Rs 30,000
:
D

Premium = 6000 $\times$ 100 $\times$ 5 % = Rs 30,000.

Question 8.

On 1st April 2017, Sunrise Ltd issued 5000, 8% Debentures of Rs. 100 each at a discount of 5%. What will be the total amount of interest for the year ending 31st March 2018?

38,000
42,000
40,000
25,000

Discuss Question

Answer: Option C. -> 40,000
:
C

Interest

= 5000*100*8%

= 40,000

Question 9.

Does the procedure for the issue of debentures is very much similar to that of the issue of shares?

Yes
No
Partially Yes
None of these

Discuss Question

Answer: Option A. -> Yes
:
A

Yes, the procedure for the issue of debentures is very much similar to that of the issue of shares

Question 10.

A company issue 5,000 12% debentures of Rs. 100 each at par, payabale as follows:
On Application : 20
On Allotment : 80
How much money is received in allotment stage if all the moneys are duly received?