MCQ on Issue and Redemption of Debentures

MCQ on Issue and Redemption of Debentures

1. Debenture includes debenture stock, bonds or any other securities of a company whether constituting a charge on the asseets of the company or not.                                                                 True

2. 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

3. Which of the following is False:

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

b.      Debenture is a part of owned capital.

c.       The payment of interest on debentures is a charge on the profits of the compny.

d.      Redeemable debentures are those debentures, which are payable on the expiry of the specific period.               

4. Which of the following statement is true:

a.       The debentures cannot be issued at a discount of more than 10% of the face value.

b.      Perpetual debentures are also known as irredeemable debentures.                                        True

c.       Debentures cannot be converted into shares.

d.      Debentures cannot be issued at a premium.

5. Loss on issue of debentures account is a revenue loss.                              False

6. Premium on redemption of debentures account is shown under the ‘Securities Premium’ in the Balance Sheet.                           False

7. Which of the following statements is false?

a.       A company can issue convertible debentures

b.      Debentures cannot be secured

c.       A company can issue redeemable debentures

d.      Debentures have no right to participate in profits over and above their fixed interest

8. Debenture premium cannot 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.       Pay dividends

d.      Write off capital loss

32. Profit on cancellation of own debentures is transferred to :

a.       Profit and loss appropriation a/c,

b.      Debenture redemption reserve,

c.       Capital reserve.

33. When debentures are redeemed out of profits, an equal amount is transferred to :

a.       General reserve,

b.      Debenture redemption reserve,

c.       Capital reserve.

34. 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.

35. The balance of sinking fund investment account after the realisation of investments is transferred to:

a.       Profit and loss account,

b.      Debentures account,

c.       Sinking fund account.

36. Excess value of net assets over purchase consideration at the time of purchase of business is credited to :

a.       General reserve,

b.      Capital reserve,

c.       Vendors’ account

d.      Goodwill

37. Excess value of Purchase consideration over net assets at the time of purchase of business is credited to :

a.       General reserve,

b.      Capital reserve,

c.       Vendors’ account

d.      Goodwill