CBSE Class 12 Accountancy Debentures Worksheet

Question. When debentures are issued at a discount and are redeemable at a premium, which of the following accounts 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) Securities Premium Reserve Account

Answer: C

Question. Convertible debentures cannot be issued at a discount if:
(a) They are to be immediately converted;
(b) They are not to be immediately converted,
(c) None of the above
(d) Both a and b

Answer: A

Question. Discount on issue of debentures is shown under the following head in the Balance sheet :
(a) Statement of profit and Loss,
(b) Other non-Current Assets,
(c) Debentures account
(d) None of these

Answer: D

Question. Which of the following is false with respect to debentures?
(a) They can be issued in lieu of dividends
(b) They can be issued for cash
(c) They can be issued for consideration other than cash
(d) They can be issued as collateral security

Answer: A

Question. Which of the following statements is true?
(a) A debenture holder is an owner of the company
(b) A debenture holder can get his money back only on the liquidation of the company
(c) A debenture issued at a discount can be redeemed at a premium
(d) A debenture holder receives interest only in the event of profits

Answer: C

Question. When debentures are issues at discount , the discount should be written off
(a) During the life of the debentures
(b) In the year of the issue of debentures
(c) Within 5 years of the issue of the debentures
(d) None of the options

Answer: A

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 all the debentures are redeemed, balance in the debentures redemption fund account is transferred to
(a) General reserve
(b) Capital reserve
(c) Capital reserve
(d) None of the options

Answer: A

Question. Convertible debentures can be
(a) Both
(b) Partly Convertible Debentures
(c) Fully convertible Debentures
(d) None of the options

Answer: A

Question. Which of the following is not true about debenture stock:
(a) It must be fully paid.
(b) Debenture Stock can be transferred in fraction.
(c) Debenture stock are identified by their distinct number

Answer: C

Question. Discount or loss on issue of debentures to be written of within 12 months from the date of balance sheet or within the period of operating cycle is shown as
(a) Other Current assets
(b) Other Non current Assets
(c) Other Current Liabilities
(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. 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. The amount of debenture is returned to the holders at the end of
(a) Predetermined maturity period
(b) Company
(c) Current Year
(d) None of the options

Answer: A

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. When all debentures are redeemed, balance in the Debenture Redemption Fund Account is transferred to:
(a) Capital Reserve
(b) General Reserve
(c) Profit & Loss Appropriation A/c
(d) None of these

Answer: A

Question. Discount on issue of Debentures is in the nature of:
(a) Revenue Loss
(b) Capital Loss
(c) Deferred Revenue Expenditure
(d) None of there

Answer: B

Question. Loss on issue of debentures is recorded as :
(a) Intangible Asset
(b) Current Asset
(c) Current Liability
(d) Miscellaneous Expenditure

Answer: D

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

Answer: B

Question. Premium on redemption of debentures is a :
(a) Personal A/c
(b) Real A/c
(c) Nominal A/c
(d) Suspense A/c

Answer: C

Question. Loss on issue of debenture is written off each year in proportion to amount of debenture which reduces with every instalment paid, Called
(a) Proportion Method
(b) Equal instalment method
(c) Both
(d) None of the options

Answer: A

Question. Debenture premium can be used to :
(a) Write off the discount on issue of shares or debentures
(b) Write off the premium on redemption of shares or debentures
(c) Write off capital loss
(d) All of the above

Answer: D

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. Debentures can be issued at :
(a) Par
(b) Discount
(c) Premium
(d) All of them

Answer: D

Question. Debenture is also named as :
(a) Share
(b) Bond
(c) Equity
(d) Reserve

Answer: B

Question. Debentures which are transferrable by mere delivery are:
(a) Registered debentures
(b) First Debentures
(c) Bearer debentures
(d) None of these

Answer: C

Question. X Co. Ltd purchased assets worth Rs 14, 40,000. It issued debentures of Rs 100 each at a discount of 4 percent in full satisfaction of the purchase consideration. The number of debentures issued to vendor is:
(a) 15, 000
(b) 14,400
(c) 16,000
(d) 30,000

Answer: A

Question. If vendors are issued debentures of ₹1,60,000 in consideration of net assets of ₹2,00,000, the balance of ₹40,000 will be credited to
(a) Reserve Capital
(b) Goodwill A/c
(c) Capital Reserve A/c
(d) Securities Premium Reserve A/c

Answer: D

Question. X Ltd. issued ₹ 2,00,000 debentures at par but repayable at a premium of 5%, the premium payable will be debited to
(a) Premium on redemption of debentures A/c
(b) Loss on issue of debentures A/c
(c) Capital Reserve A/c
(d) Securities Premium Reserve A/c

Answer: B

Question. Debentures issued as collateral security will be debited to
(a) Bank A/c
(b) Debenture Suspense A/c
(c) Debentures A/c
(d) Collateral Security A/c

Answer: B

Question. Sunrise Ltd. issued 2,000 9% Debentures of ₹100 each at a discount of 5% redeemable at the end of 5 years at a premium of 6%. Loss on issue of debentures A/c will be debited by
(a) ₹ 20,000
(b) ₹ 28,000
(c) ₹ 22,000
(d) ₹ 25,000

Answer: C

Question. X Ltd. took over assets of ₹3,50,000 and liabilities of ₹30,000 of Y Ltd. for a purchase consideration of ₹3,30,000. What will it lead to?
(a) A goodwill of 20,000
(b) A capital reserve of ₹20,000
(c) A goodwill of ₹10,000
(d) No goodwill, no Capital Reserve

Answer: C

Fill in the blanks :

Question. ................. refers to extinguishing or discharging the liability on account of debentures in accordance with the terms of issue.
Answer: Redemption of debentures

Question. .......................... is a written instrument acknowledging a debt under the common seal of the company.
Answer: Debenture

Question. No DRR is required for debentures issued by ............... regulated by Reserve Bank of India ................. Companies for both public as well as privately placed debentures.
Answer: All India Financial Institutions (AIFIs) Banking

Question. A.................... may be defined as subsidiary or secondary or additional security beside the primary security when a company obtains a loan or overdraft from a bank or any other financial Instituiton.
Answer: collateral security

Question. Debentures which are convertible into equity shares or in any other security either at the option of the company or the debenture holders are called ................
Answer: convertible debentures

Question. ................... refer to those debentures where a charge is created on the assets of the company for the purpose of payment in case of default. The charge may be fixed or floating.
Answer: Secured debentures

Question. The amount credited to the Debenture Redemption Reserve shall not be utilised by the company except for the purpose of ....................
Answer: redemption of debentures

Question. ........... can be issued at dicount but............ cannot be issued at discount except ESOP.
Answer: Debentures, Shares