Issue and Redemption of Debentures Question Answer

Question 1

____________ means repayment of the amount of debentures to debentureholders.

A.Redemption of debentures

B.Issue of debentures

C.Collection of debentures

D.None of these

SOLUTION

Solution : A

Redemption of debentures means repayment of the amount of debentures to debentureholders.

Question 2

The journal entry for Premium on redemption of debentures while transfer to debentureholders-

A.Debentures A/c Dr
To Debentureholders A/c

B.Debentures A/c Dr
Premium on redemption of debentures Dr
To Debentureholders A/c

C.Debentures A/c Dr
To Premium on redemption of debentures

D.None of these

SOLUTION

Solution : B

The journal entry for Premium on redemption of debentures while transfer to debentureholders-
Debentures A/c Dr
Premium on redemption of debentures Dr
To Debentureholders A/c

Question 3

The journal entry for payment to debentureholders

A.Debentureholders A/c Dr
To Bank A/c

B.Debentureholders A/c Dr
To Debnetures A/c

C.Debenture redemption reserveA/c Dr
To Debnetures A/c

D.General reserve A/c Dr
To Bank A/c

SOLUTION

Solution : A

The journal entry for payment to debentureholders-
Debentureholders A/c Dr
To Bank A/c

Question 4

The debentures may be redeemed ______.

A.In Lumpsum only

B.In Installments only

C.Either in Lumpsum or in Installment

D.None of these

SOLUTION

Solution : C

The debentures may be redeemed either in lumpsum or in installment.

Question 5

The Debentures Suspense Account will appear on the ___side of the balance sheet.

A.Capital

B.Liability

C.Asset

D.None of these

SOLUTION

Solution : C

The Debentures Suspense Account will appear on the assets side of the balance sheet

Question 6

Can we redeem debentures at premium?

A.Yes, we can.

B.No, we can’t.

C.Partially Yes

D.None of these

SOLUTION

Solution : A

Yes, we can redeem debentures at premium.

Question 7

By what amount Bank A/c is to be credited while redemption when 10,000 debentures of Rs. 100 each are isued at premium of Rs. 20 and to be redeemed at par ?

A.10,000

B.12,00,000

C.10,00,000

D.2,00,000

SOLUTION

Solution : C

Redemption amount to be credited to Bank A/c = Rs. 10,000 * 10 = Rs. 10,00,000

Question 8

The journal entry for receipt of application money-

A.Bank A/c Dr.
To Debentureholders A/c

B.Bank A/c Dr.
To Debentures A/c

C.Bank A/c Dr.
To Debenture Application A/c

D.None of these

SOLUTION

Solution : C

The journal entry for receipt of application money-
Bank A/c Dr.
To Debenture Application A/c

Question 9

Which of the following are types of debentures?

A.Irredeemeble

B.Redeemable

C.Both Irredeemeble and Redeemable

D.None of these

SOLUTION

Solution : C

Both Irredeemeble and Redeemable are types of debentures.

Question 10

Can we call money in instaalments for the debentures ?

A.Yes

B.No

SOLUTION

Solution : A

Yes, we can call money in instaalments for the debentures