Bihar Board 12th Accountancy Objective Answers Chapter 7 Issue and Redemption of Debentures

Bihar Board 12th Accountancy Objective Questions and Answers

Bihar Board 12th Accountancy Objective Answers Chapter 7 Issue and Redemption of Debentures

Question 1.
Debenture is a :
(A) Loan certificate
(B) Cash certificate
(C) Credit certificate
(D) None of these
Answer:
(A) Loan certificate

Question 2.
Debentureholders are the :
(A) Customers of the Company
(B) Owners of the Company
(C) Creditors of the Company
(D) None of these
Answer:
(C) Creditors of the Company

Question 3.
In case of issue of debentures as a collateral security for loan from the bank which account will be debited :
(A) Bank Account
(B) Bank Loan Account
(C) Debentures Account
(D) Debentures Suspense Account
Answer:
(D) Debentures Suspense Account

Question 4.
If debentures of ₹ 4,50,000 are issued for the consideration of net assets of ₹ 5,00,000 balance ₹ 50,000 will be credited to:
(A) Profit & Loss A/c
(B) Goodwill A/c
(C) General Reserve A/c
(D) Capital Reserve A/c
Answer:
(D) Capital Reserve A/c

Question 5.
Debentures which are transferred by mere delivery are called:
(A) Registered Debentures
(B) First Debentures
(C) Bearer Debentures
(D) None of these
Answer:
(C) Bearer Debentures

Question 6.
In the Balance Sheet of a Company, Debentures are shown under the head :
(A) Unsecured Loans
(B) Long-term Loans
(C) Current Liabilities
(D) Reserve and Surplus
Answer:
(B) Long-term Loans

Question 7.
Discount on issue of Debetures is in the nature of:
(A) Revenue Loss
(B) Capital Loss
(C) Deferred Revenue Expediture
(D) None of there
Answer:
(B) Capital Loss

Question 8.
On liquidation of a company, principal amount of debentures is returned:
(A) First of all
(B) Last of all
(C) Before Equity Capital
(D) None of those
Answer:
(A) First of all

Question 9.
Interest payable on debentures is :
(A) An appropriation of profits of the company
(B) A charge against profits of the company
(C) Transfer to Sinking Fund
(D) None of the above
Answer:
(B) A charge against profits of the company

Question 10.
Debentures cannot be redeemed at:
(A) Premium
(B) Discount
(C) Par
(D) None of these
Answer:
(B) Discount

Question 11.
Debentures represent:
(A) Director’s Share in a Company
(B) Investments by Equity Shareholders
(C) Long-term Debt of the Business
(D) None of these
Answer:
(C) Long-term Debt of the Business

Question 12.
Debentures carries interest at: .
(A) 12% p.a.
(B) Fixed Rate
(C) 20% p.a.
(D) 6% p.a.
Answer:
(B) Fixed Rate

Question 13.
Generally debentures are :
(A) Secured
(B) Unsecured
(C) Partly Secured
(D) None of these
Answer:
(A) Secured

Question 14.
Premium on issue of debentures is a for Company :
(A) Revenue Receipt
(B) Profit
(C) Capital Receipt
(D) All of these
Answer:
(C) Capital Receipt

Question 15.
For a company discount on issue of debentures is :
(A) Capital Loss
(B) Revenue Loss
(C) General Loss
(D) None of these
Answer:
(A) Capital Loss

Question 16.
‘Premimum on issue of debentures’ is shown in the Balance Sheet on:
(A) Assets side
(B) Liabilities side
(C) None of these
(D) All of these
Answer:
(B) Liabilities side

Question 17.
The balance of discount on debentures is shown in the Balance Sheet on:
(A) Assets side
(B) Liabilities side
(C) None of these
(D) All of these
Answer:
(A) Assets side

Question 18.
Rate of interest on debentures is :
(A) 12% p.a.
(B) 20% p.a.
(C) Fixed Rate
(D) 15% p.a.
Answer:
(C) Fixed Rate

Question 19.
Discount on issue of Debentures should be written off:
(A) Out of Securities Premium Account
(B) Out of Capital Profits
(C) Out of Statements of Profit and Loss
(D) In the above order over the period of debentures
Answer:
(D) In the above order over the period of debentures

Question 20.
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) ₹ 5,00,000

Question 21.
Debentureholdergets:
(A) Di vidend
(B) Profit
(C) Interest
(D) Interest at fixed rate
Answer:
(C) Interest

Question 22.
Loss on issue of debentures is generally written off in :
(A) 5 years
(B) 10 years
(C) 15 years
(D) Over the period of redemption
Answer:
(D) Over the period of redemption

Question 23.
When debentures are issued as collateral security, „ which entry has to be passed ?
(A) Debenture Suspense A/c Dr.
To Debentures
(B) No entry has to be made
(C) (a) or (b)
(D) None of these
Answer:
(C) (a) or (b)

Question 24.
Debentureholder receives:
(A) Dividend
(B) Interest
(C) Both Dividend and Interest
(D) Bonus
Answer:
(B) Interest

Question 25.
Debentureholders are called of the company.
(A) Creditors
(B) Debtors
(C) Owners
(D) Bankers
Answer:
(A) Creditors

Question 26.
A company issued ₹ 1,00,000 12% debentures of ₹ 100 each. The amount of interest on debentures will be:
(A) ₹ 12,000
(B) ₹ 1,20,000
(C) ₹ 12,00,000
(D) None of these
Answer:
(C) ₹ 12,00,000

Question 27.
Premium on redemption of debentures account is :
(A) A real account
(B) A nominal account
(C) A personal account
(D) None of these
Answer:
(C) A personal account

Question 28.
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) All of the above

Question 29.
Which of the following is false ?
(A) A company can issue redeemable debentures
(B) A company can issue debentures with voting rights
(C) A company can buy its own shares
(D) A company can buy its own debentures
Answer:
(B) A company can issue debentures with voting rights

Question 30.
Debenture is the part of:
(A) Share Capital
(B) Long-term Borrowings
(C) Owned Capital
(D) None, of these
Answer:
(B) Long-term Borrowings

Question 31.
Consideration of Debenture is:
(A) Profit
(B) Dividend
(C) Interest
(D) None of these
Answer:
(C) Interest

Question 32.
Premium on Redemption of Debenture A/c is.:
(A) Asset
(B) Liability
(C) Expense
(D) Revenue
Answer:
(B) Liability

Question 33.
Debenture is a :
(A) Loan Certificate
(B) Cash Certificate
(C) Credit Certificate
(D) None of these
Answer:
(A) Loan Certificate

Question 34.
Loss on issue of debentures is recorded as :
(A) Intangible Asset
(B) Current Asset
(C) Current Liability
(D) Miscellaneous Expenditure
Answer:
(D) Miscellaneous Expenditure

Question 35.
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) Capital Reserve

Question 36.
According to SEBI guidelines, a Company will have to create debenture redemption reserve equivalent to the amount of the following percentage of debenture issued:
(A) 50%
(B) 25%
(C) 70%
(D) 100%
Answer:
(B) 25%

Question 37.
The balance of ‘Sinking Fund Account’ after the redemption of debentures is transferred to :
(A) Profit & Loss Account
(B) Profit & Loss Appropriation Account
(C) General Reserve Account
(D) Sinking Fund Account
Answer:
(C) General Reserve Account

Question 38.
Profit on cancellation of own debentures is transferred to:
(A) Profit & Loss Account
(B) Profit & Loss Appropriation Account
(C) General Reserve Account
(D) Capital Reserve Account
Answer:
(D) Capital Reserve Account

Question 39.
If debenture of ₹ 1,00,000 were issued for discount of ₹ 10,000, which are redeemable after four years. Then amount of discount to be written off from P. & L. Account each year is :
(A) ₹ 3,000
(B) ₹ 4,000
(C) ₹ 2,500
(D) ₹ 5,000
Answer:
(C) ₹ 2,500

Question 40.
Debentures can be redeemed out of:
(A) Profit
(B) Capital
(C) Provision
(D) All of the above
Answer:
(D) All of the above

Question 41.
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) Nominal A/c

Question 42.
Premium on redemption of debentures is genertally provided at the time of ……………
(A) Issue of debentures
(B) Redemption of debentures
(C) Writing off
(D) After 10 years
Answer:
(B) Redemption of debentures

Question 43.
Debentures cannot be redeemed at:
(A) Par
(B) Premium
(C) Discount
(D) More than 10% premium
Answer:
(C) Discount

Question 44.
If debentures purchased in open market are not immediately cancalled, they are treated as :
(A) Current Assets
(B) Current Liabilities
(C) Investment
(D) Capital
Answer:
(C) Investment

Question 45.
Sources of finance of the redemption of debentures are:
(A) Redemption out of profits
(B) Redemption out of capital
(C) The proceeds from fresh issue of shares/debentures
(D) All the above
Answer:
(D) All the above

Question 46.
A company issued 1,000,12% debentures of ₹ 100 each at 10% premium. 12% stand for:
(A) Rate of dividend
(B) Rate of Tax
(C) Rate of interest
(D) None of these
Answer:
(C) Rate of interest

Question 47.
A company should transfer to Debenture Redemption Reserve A/c at least what percent of the amount of debentures issued before the commencement of redemption of debentries-
(A) 50%
(B) 25%
(C) 15%
(D) 100%
Answer:
(B) 25%

Question 48.
If redemption of debentures is made by conversion method, the amount to be transferred to ‘Debenture Redemption Reserve Account’ will be equal to…….percent of converted amounted.
(A) 40
(B) 50
(C) 60
(D) Not required
Answer:
(D) Not required

Question 49.
Loss on Issue of Debenture Account is shown:
(A) On Assets side of Balance Sheet
(B) On Liabilities side of Balance Sheet
(C) On Credit side of P & L Account
(D) None of these
Answer:
(A) On Assets side of Balance Sheet

Question 50.
Profit on sale of Sinking Fund Investment is transferred to:
(A) Profit & Loss Account
(B) General Reserve
(C) Sinking Fund Account
(D) Capital Reserve
Answer:
(C) Sinking Fund Account

Question 51.
Premium on Redemption of Debentures A/c is:
(A) Asset
(B) Expenses
(C) Liability
(D) Revenue
Answer:
(C) Liability

Question 52.
Interest on sinking fund investment is credited to :
(A) Profit & Loss A/c
(B) Sinking Fund A/c
(C) General Reserve A/c
(D) Sinking Fund Investment A/c
Answer:
(B) Sinking Fund A/c

Question 53.
Sinking fund investment is:
(A) An Income
(B) An exause
(C) An Asset
(D) A Liability
Answer:
(C) An Asset

Question 54.
When debentures are issued at par and are redeemable at a premium, the loss on such an issue is debited to :
(A) Profit & Loss A/c
(B) Debenture Application and Allotment A/c
(C) Loss on Issue of Debentures A/c
(D) Premium on Redemption A/c
Answer:
(C) Loss on Issue of Debentures A/c

Question 55.
Own debentures are those debentures of the company which ?
(A) The company allots to its own promotors
(B) The company allots to its directors
(C) The company purchases from the markets and hold them as investments
(D) None of these
Answer:
(C) The company purchases from the markets and hold them as investments

Question 56.
When debentures are redeemed out of profits, an equivalent amount is transferred to :
(A) General Reserve
(B) Debenture Redemption Reserve
(C) Capital Reserve
(D) Profit & Loss A/c
Answer:
(B) Debenture Redemption Reserve

Question 57.
Profit on sale of debentures redemption fund investment in the first instance in credited to :
(A) Debenture Redemption Fund A/c
(B) Profit & Loss Appropriation A/c
(C) General Reserve A/c
(D) Sinking Fund A/c
Answer:
(A) Debenture Redemption Fund A/c

Question 58.
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 A/c
(B) Premium on Redemption of Debentures A/c
(C) Loss on Issue of Debentures A/c
(D) Profit & Loss A/c
Answer:
(C) Loss on Issue of Debentures A/c

Question 59.
According to SEBI guidelines what percentage of the amount of debentures must be transferred to Debenture Redemption Reserve, before the commencement of redumption of debentures, in case of convertible debentures ?
(A) 25%
(B) 50%
(C)100%
(D) zero
Answer:
(D) zero

Question 60.
Profit on redemption of debentures in transferred to which account ?
(A) Capital Reserve Account
(B) Sinking Gund Account
(C) General Reserve Account
(D) Profit & Loss Account
Answer:
(A) Capital Reserve Account

Question 61.
Profit on cancellation of own debentures is :
(A) Revenue Profit
(B) Capital Profit
(C) Operating Profit
(D) Trading Profit
Answer:
(B) Capital Profit

Question 62.
6,000 debentures of ₹ 10 each where discharged by issuing equity shares of ₹ 10 each at 20% premium. The number of shares issued will be :
(A) 50,000
(B) 60,000
(C) 5,000
(D) 6,000
Answer:
(C) 5,000

Question 63.
Every company required to create DRR shall on or before the 30th April of each year, deposit or invest, a sum which shall not be less than…………of the amount of its debentures maturing (to be redeemed) during the year ending on 31st March of the next year.)
(A) 10%
(B) 15%
(C) 25%
(D) 50%
Answer:
(B) 15%

Question 64.
A Sinking Fund is a part of:
(A) Fixed Liabilities
(B) Current Liabilities
(C) Reserves and Surplus
(D) Fixed Assets
Answer:
(C) Reserves and Surplus

Question 65.
A company issued 1000,12% debentures of₹ 100 each at 10% premium. 12% stand for :
(A) Rate of Dividend
(B) Rate of Tax
(C) Rate of Interest
(D) None of these
Answer:
(C) Rate of Interest

Question 66.
BST Ltd. want to redeem its 900,10% debentures at 105% by converting them into shares of ₹ 10 each at ₹ 9 each. The number of shares to be issued will be :
(A) 9,000 Shares
(B) 10,500 Shares
(C) 10,000 Shares
(D) 8,500 Shares
Answer:
(B) 10,500 Shares

Question 67.
‘Premium on Redemption of Debentures A/c is in the nature of:
(A) Personal A/c
(B) Real A/c
(C) Nominal A/c
(D) None of these
Answer:
(C) Nominal A/c

Question 68.
Deep Ltd. issue 10,00,000,7 % debenturesw of 100 Rs. each at a discount of 4%, redeemable after 5 years at a premium of 6%. Loss issue of debentures is :
(A) ₹ 10,00,000
(B) ₹ 6,00,000
(C) ₹ 16,00,000
(D) ₹ 4,00,000
Answer:
(A) ₹ 10,00,000