Online Test — Company Accounts: Issue of Debentures
15 Questions • 15 min • Chapter MCQ
15:00
Question 1 of 15
A debenture is an acknowledgement of:
Ownership
A debt
A dividend
A reserve
Explanation: A debenture acknowledges a debt of the company.
Question 2 of 15
A debenture-holder is a:
Owner
Creditor
Director
Member
Explanation: A debenture-holder is a creditor (lender).
Question 3 of 15
The return on a debenture is:
A variable dividend
Fixed interest
Bonus
Nothing
Explanation: Debentures carry fixed interest.
Question 4 of 15
Debenture interest is:
An appropriation of profit
A charge against profit
Paid only if profit
A dividend
Explanation: Interest is an expense, paid even in a loss.
Question 5 of 15
Do debenture-holders have voting rights?
Yes
No
Only equity ones
Always
Explanation: Debenture-holders, being creditors, have no voting rights.
Question 6 of 15
Issue at par: Bank A/c Dr; To ____.
Securities Premium
Debentures A/c
Discount A/c
Capital A/c
Explanation: At par, Bank Dr / To Debentures A/c.
Question 7 of 15
Premium on issue of debentures is credited to:
Debentures A/c
Securities Premium Reserve A/c
Bank A/c
Discount A/c
Explanation: Premium goes to Securities Premium Reserve.
Question 8 of 15
Unlike shares, debentures may be issued at a:
Premium only
Discount
Par only
Loss only
Explanation: Debentures may be issued at a discount.
Question 9 of 15
Discount on issue of debentures is a:
Gain
Capital loss to be written off
Liability
Income
Explanation: It is a capital loss written off over the debentures' life.
Question 10 of 15
A Rs 100 debenture issued at Rs 95 has a discount of:
Rs 5
Rs 95
Rs 100
Rs 0
Explanation: Discount = 100 − 95 = Rs 5.
Question 11 of 15
When redeemable at a premium, the company provides for it at issue via:
Loss on Issue / Premium on Redemption
Securities Premium only
Bank A/c
Capital A/c
Explanation: Loss on Issue Dr and Premium on Redemption (liability) Cr.
Question 12 of 15
Debentures issued to settle a vendor for assets are issued for:
Cash
Consideration other than cash
Collateral
Bonus
Explanation: This is issue for consideration other than cash.
Question 13 of 15
If consideration exceeds the net assets acquired, the excess is:
Capital reserve
Goodwill
A loss
Premium
Explanation: Excess consideration over net assets is goodwill.
Question 14 of 15
Debentures given as secondary security for a loan are issued as:
Bonus
Collateral security
Sweat equity
A dividend
Explanation: These are collateral-security debentures.
Question 15 of 15
Debenture interest is charged in the Statement of Profit and Loss as:
Finance cost
Revenue
Dividend
Reserve
Explanation: Interest on debentures is a finance cost.