MCQ on Issue and Redemption of Debentures
Multiple choice questions and answers
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.
Also Read MCQ
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
9. Profit on cancellation of own
debentures is transferred to :
a.
Profit and loss appropriation a/c,
b.
Debenture redemption reserve,
c.
Capital reserve.
10. When debentures are redeemed
out of profits, an equal amount is transferred to :
a.
General reserve,
b.
Debenture redemption reserve,
c.
Capital reserve.
11. 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.
12. 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.
13. 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
14. 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