CBSE Class 12 Accountancy Redemption Of Debentures MCQs Set B

Question. Debentures account is always credited with the
(a) Nominal value
(b) Premium Value
(c) Discount value
(d) None of the options

Answer : A

Question. Own debentures are those debentures of the company which:
(a) The company purchases from the market and keeps them as investments.
(b) The company allots to its own promoters,
(c) The company allots to its Director,
(d) None of the options

Answer : A

Question. Premium on redemption of debentures account is
(a) A nominal account – expenditure
(b) A real account
(c) A personal account
(d) A nominal account – income

Answer : A

Question. Sometimes company can purchase the debentures at more than the redeemable value due to the following reasons :
(a) When rate of interest on debentures is more than the current market rate of interest on debentures in the industry
(b) To maintain the solvency ratio.
(c) To utilize the surplus money or funds which are lying idle with the company
(d) All of the options

Answer : D

Question. Debentures that do not carry any charge or security on assets of the companyare known as:
(a) secured debentures
(b) unsecured debentures
(c) convertible debentures
(d) registered debentures.

Answer : B

Question. Debenture is:
(a) written instrument acknowledging a debt written by its holder.
(b) An oral acknowledgement of debt by a company
(c) A written instrument acknowledging a debt written by its company
(d) None of the options

Answer : C

Question. Interest on debenture is calculated on:
(a) its face value
(b) its issue price
(c) its book value
(d) its cost price.

Answer : A

Question. Debentures issued as collateral security will be______ to debenture suspenseaccount:
(a) debited
(b) credited
(c) sometimes debited and sometimes credited
(d) None of the options

Answer : A

Question. Collateral security means ___________security:
(a) primary
(b) secondary
(c) government
(d) valuable.

Answer : B

Question. Which of the following is not a characteristic of Bearer Debentures?
(a) Their transfer requires a deed of transfer
(b) They are treated as negotiable instruments
(c) They are transferable by mere delivery
(d) The interest on it is paid to the holder irrespective of identity

Answer : A

Question. Sunrise Ltd purchased a building for Rs.5,00,000 payable as 15% in cash and balance by allotment of 9% debentures of Rs. 100 each at a premium of 25%. Number of debentures issued will be :
(a) 4,250
(b 4,000
(c) 5,000
(d) 3,400

Answer : D

Question. Interest on Debentures is paid on
(a) Amount received on Issue.
(b) Nominal (Face) Value.
(c) On Premium.
(d) None of the options

Answer : B

Question. As per the Companies Act, Interest accrued and due on debentures should be shown Under
(a) Debentures.
(b) Capital
(c) Shares
(d) None of the options

Answer : A

Question. Debenture is a
(a) Long term Loan
(b) Short term loan
(c) Dividend
(d) None of the options

Answer : A

Question. If Vendors are issued debentures of Rs.4,40,000 in consideration of assets of Rs. 5,00,000 and liabilities of Rs. 1,00,000, the balance of Rs.40,000 will be debited to:
(a) General Reserve Account
(b) Capital Reserve Account
(c) Goodwill Account
(d) Statement of Profit & Loss

Answer : C

Question. Person holding debenture is known as
(a) Debenture Holder
(b) Share Holder
(c) Both
(d) None of the options

Answer : A

Question. When debentures are issued at par and are redeemable at a premium, the loss on such an issue debited to
(a) Loss on issue of debentures account
(b) Profit and loss account
(c) Profit and loss account
(d) None of the options

Answer : A

Question. Debentures of a Company can be issued :
(a) For Cash
(b) For Consideration other than Cash
(c) As a Collateral Security
(d) Any of the above

Answer : D

Question. William Pens Ltd. issued 10,000, 7% Debentures of Rs. 100 each at a discount of Rs. 4. It has a balance in Securities Premium Reserve of Rs. 25,000. It will write off Discount on Issue of Debentures
(a) Rs. 40,000 from Securities Premium Reserve.
(b) Rs. 40,000 from Statement of Profit and Loss.
(c) Rs. 25,000 from Securities Premium Reserve and Rs. 15,000 from Statement of Profit and Loss (Finance Cost).
(d) Rs. 15,000 from Securities Premium Reserve and Rs. 25,000 from Statement of Profit and Loss (Finance Cost).

Answer : C

Question. F Ltd. purchased machinery for a book value of ₹ 4,00,000. The consideration was paid by issue of 10% Debentures of ₹ 100 each at a discount of 20%. The Debenture Account will be credited by :
(a) ₹ 4,00,000
(b) ₹ 5,00,000
(c) ₹ 3,20,000
(d) ₹ 4,80,000

Answer : B

Question. When a company issue its debentures at discount, the amount of discount is considered as a:
(a) Capital loss
(b) Normal Loss
(c) Capital gain
(d) Reserve & Surplus

Answer : A

Question. Types of debentures on the basis of records
(a) Bearer debentures
(b) Registered debentures
(c) Both
(d) None of the options

Answer : C

Question. Apple Computers Ltd. issued 10,000,7% Debentures of Rs. 100 each at a discount of Rs. 6 on 1st October, 2019. Interest for the year ended 31 st March, 2020 will be
(a) Rs. 65,800.
(b) Rs. 32,900.
(c) Rs. 70,000.
(d) Rs. 35,000.

Answer : D

Question. A debenture holder is entitled to :
(a) Fixed dividend
(b) Share in profits
(c) Voting rights in the company
(d) Interest at the fixed rate

Answer : D

Question. Which is an agreement between the company and the trustees to look after the interest of debenture holders.
(a) Debenture trust deed
(b) Partnership deed
(c) Both
(d) None of the options

Answer : A

Question. Debentures which are transferable by mere delivery are
(a) registered debentures
(b) first debentures
(c) bearer debentures
(d) second debentures.

Answer : C

Question.When debentures are issued at par and redeemable and premium the loss onsuch an issue is debited to:
(a) profit and loss account
(b) debenture application and allotment account
(c) loss on issue of debentures account
(d) discount on issue of debentures account.

Answer : C

Question. Excess value of net assets over purchase consideration at the time ofpurchase of business is credited to:
(a) General reserve
(b) Capital reserve
(c) Vendor’s account
(d) Goodwill account.

Answer : B

Question. When debentures are issued at discount and redeemable at a premium whichone of the following account is debited at the time of issue ?
(a) debentures account
(b) premium on redemption of debentures account
(c) loss on issue of debentures account
(d) None of the options

Answer : C

Question. A company can issue debentures
(a) for cash
(b) as a collateral security
(c) for consideration other than cash
(d) any of the above.

Answer : D

Question. What is the nature of premium on redemption of debenture account
(a) Real account
(b) nominal account
(c) personal account
(d) None of the options

Answer : C

Question. When the number of debentures applied is less than number of debenturesoffered to public the issue is said to be :
(a) oversubscribed
(b) under subscribe
(c) Fully subscribed
(d) None of the options

Answer : B

Question. Maximum limit on premium on issue of debentures is
(a) 10%
(b) 20%
(c) 15%
(d) no limit.

Answer : D

Question. Debenture interest:
(a) is payable only in case of profits
(b) accumulates in case of losses are inadequate profits
(c) is payable irrespective of profit or loss
(d) None of the options

Answer : C

Question. In case debentures of Rs. 10000 are issued at par but redeemable at a premium of 10% the premium payable is debited to
(a) Loss on issue of debentures A/c
(b) Debentures Suspense Account
(c) Both
(d) None of the options

Answer : A

Question. Which of the following statements is false?
(a) Debentures cannot be secured
(b) A company can issue convertible debentures
(c) A company can issue redeemable debentures
(d) Debentures have no right to participate in profits over and above their fixed interest

Answer : A

Question. On liquidation of company, principal amount of debentures is returned :
(a) First of All
(b) Last of All
(c) Before Equity Capital
(d) After Equity Capital

Answer : C

Question. Premium on Redemption of Debentures Account is
(a) Personal Account
(b) Real Account
(c) Capital A/c
(d) None of the options

Answer : A

Question. Debenture holders are :
(a) Owners of the Company
(b) Debtors of the Company
(c) Creditors of the Company
(d) Promoters of the Company

Answer : C

Question. Debentureholders are
(a) owners of the company.
(b) lenders of the company.
(c) vendors of the company.
(d) customers of the company.

Answer : B

Question. debentures can be issued under the ________ of company
(a) Common seal
(b) Rules & Principles
(c) Companies Act
(d) None of the options

Answer : A

Question. ABC took over the assets of Rs7,60,000 and liabilities of Rs80,000 of Ylimited for purchase consideration of Rs5,85,000 payable by the issue of 12%debentures of Rs100 each at a discount of 10%. The number of debentures tobe issued is:
(a) 6600
(b) 6500
(c) 4500
(d) 5400.

Answer : B

Question. XYZ limited issued 4000,12% debentures of Rs100 each at a premium of 5%.the total amount of interest for one year will be:
(a) 48,000
(b) 58,000
(c) 50,000
(d) 50,400.

Answer : A

Question. 10% debenture issued at Rs105 is repayable at Rs110, the face value ofdebenture being Rs100. Calculate the amount of loss on redemption ofdebentures:
(a) 10
(b) 5
(c) 15
(d) 25.

Answer : A

Question. A ltd took over the assets of Rs6,60,000 and liabilities of Rs80,000 of B Ltdfor an agreed purchase consideration of Rs6,00,000 payable 10% in cashand the balance by issue of 15% debentures of Rs100 each at 10% discount.The number of debentures to be issued is:
(a) 6600
(b) 5400
(c) 6000
(d) 4500

Answer : C

Question. Electronics Ltd. issued 10,000, 6% Debentures of Rs. 100 each at a premium of Rs. 10. It will credit 6% Debentures Account by
(a) Rs. 11,00,000.
(b) Rs. 10,00,000.
(c) Rs. 9,00,000.
(d) Rs. 8,00,000.

Answer : B

Question. Premium on redemption of debentures account is _.
(a) A real account
(b) A nominal account – income
(c) A personal account
(d) A nominal account – expenditure

Answer : D

Question. ABC limited issues 10,000 9% debentures of 100 each at a premium of 5%payable at a premium of 10%, the loss on issue of debentures account will bedebited to by:
(a) Rs10,00,000
(b) Rs1,00,000
(c) Rs10,50,000
(d) Rs1,05,000

Answer : B

Question. Premium received on issue of debentures may be utilised for writing off:
(a) premium allowed on redemption of debentures
(b) writing off preliminary expenses
(c) writing off discount allowed on issue of shares
(d) all of the above.

Answer : D

Question. Issued 4,000, 12% debentures of Rs. 100 each at a premium of 4%, redeemable at a premium of 10%. In such case :
(a) Loss on Issue will be debited by Rs.24,000
(b) Loss on Issue will be debited by Rs.56,000
(c) Loss on Issue will be debited by Rs.40,000
(d) Premium on Redemption will be credited by Rs.24,000

Answer : C

Question. Profit on sale of debenture redemption fund investments in the first instance is credited to
(a) Debenture redemption fund account
(b) Profit and loss appropriation account
(c) General reserve account
(d) None of the options

Answer : A

FILL IN THE BLANKS:

Question. Interest on debentures is paid on the _________of Debentures.
Answer : Face value

Question. If X ltd purchased plant worth Rs5 lakh from Y ltd but agreed to issue 5250 10% . goodwill;Debentures of Rs100 each to Vendor. The difference in the amount will be adjusted in _______account.
Answer : goodwill;

Question.________is the rate at which interest is payable on Debentures.
Answer : coupon rate

Question.____________Debentures are not secured with a specific asset rather they aresecured on all the assets of the company in general. floating;
Answer : floating;

Question. If X ltd issued 1,000; 10% Debentures of Rs100 each at a discount of 5% butredeemable after 4 years at a premium of 6%, loss on issue of Debentures a/c will be debited by _________.
Answer : Rs11,000