Practice Test


1) A Ltd. issued As 1,00,000 Debentures at a discount of 6% on 1st Jan., 2001 repayable at the end of 5th year. Discount written off is.


2) Discount on issue of debentures is a ____.


3) Loss on issue of debentures is treated as ____.


4) Debentures issued as collateral security is ___.


5) A company can redeem its debentures by ___.


6) Omega Ltd. purchased assets of Alfa Ltd. for purchase considerationof Rs.60 lacs. It was decided that the purchase consideration will discharged by issue of 10% debentures of Rs.10/- each at a premium of 20%. The numberof debentures issued will be


7) A company issues 100 debentures of Rs.1,000 each at 97 per cent. These are repayable out of profits by equal annual drawings over 5 years.Discount on issue of debentures will written off in the ratio.


8) The premium collected on issue of debentures is transferred to


9) Debentures can be issued


10) Loss on issue of debentures is a/an


11) ______ debentures need not be registered with the company.


12) Debentures issued as a collateral security are in the nature of a _________


13) Debentures are part of _____ funds.


14) Debenture holders are ________of the company.


15) Debenture holders ______ voting rights.


16) Debentures ____ repayable.


17) Debentures Bonds ______ partly paid


18) Debenture Stock ________ partly paid.


19) Debenture Bonds________ transferred in round amounts as a whole.


20) Debenture Stock ____ transferred in fractions or odd amounts


21) Debentures mean the shares which are entitled to a fixed rate of interest or dividends.


22) Debentures mean shares which are secured against the assets of the company.


23) Debentures form part of own funds.


24) Debentures form part of owed funds.


25) The rate of interest on debentures may vary from year to year depending on the profits earned.


26) Interest on debentures must be paid whether there is any profit or not


27) Dividends on preference shares have no priority over interest on debentures.


28) On winding up, debenture-holdersmust be repaid before cumulative preference shareholders.


29) The maximum rate of discount at which debentures can be issued is 10%.


30) Interest on debenture is payable only when company earns profits.


31) Debenture holders are entitled to receive interest at fixed rate.


32) Debenture holders are not the members of the company.


33) There is restriction on issue of debentures at discount.


34) Premium on redemption of debentures A/c is credited at the time of issuing debentures.


35) The balance of debenture is transferred to liabilities side of Balance Sheet.


36) Discount on issue of debentures A/c is a fictitious asset.


37) Securities premium or discount on issue of debenture is calculated on the face value of debentures issue.


38) Debentures can be forfeited for non-payment of calls.


39) Debenture can be issued at a discount and redeemed at a premium.


40) A company can buy its own debentures.


41) A company can issue debentures with voting rights.


42) A company can issue irredeemable debentures.


43) Convertible debentures are those thatcan be converted to cash at any time.


44) Securities Premium A/c and Premium on Redemption of Debentures A/c have the same meaning.


45) Which of the following is True ?


46) Premium on redemption of debenture account is


47) Which of the following is false ?


48) Which of the following is false ?


49) Debentures premium cannot be used to


50) F ltd purchased Machinery from G company for a book value of Rs.4,00,000.The consideration was paid by issue of 10% debenture of Rs.100.each at a discount of 20%..The debenture account was credited with


51) T ltd has issued 14% debenture of Rs.20,00,000 at a discount of 10% on April 01,2004 and the company pay's interest half-yearly on June 30,December 31 every year. On march 31,2006,the amount shown as 'interest accrued but not due 'in the balance sheet will be


52) On May 01,2004 U ltd .issued 7%10,000 convertible debenture of Rs.100 each at a premium of 20%.Interest is payable on September 30 & March 31 every year. Assuming that the interest runs from the date of issue, the amount of interest expenditure debited to profit & loss account for the year ended March 31,2005=?


53) Which of the following is True with respect to debentures ?


54) W ltd issued 20,000, 8 % debenture of Rs.10 each at par ,which are redeemable after 5 years at a premium of 20%.The amount of loss on redemption of debenture to be written off every year =?


55) When debentures are issued as collateral security ,the final entry for recording the transaction in the books is


56) Which of the following is false ?


57) Debentures can be I. Mortgage Debenture or Simple Debenture ; II.Registered Debenture or Bearer Debenture III.Redeemable Debentures or Irredeemable Debenture IV.Convertible Debenture or Non-convertible Debenture


58) Which of the following statements is false ?


59) As per the companies Act,' interest accrued & due on debenture 'should be shown


60) L ltd purchased Land & building from G company for a book value of Rs.2,00,000.The consideration was paid by issue of 12% debenture of Rs.100.each at a discount of 20%..The debenture account was credited with


61) V ltd issued 5,000, 12 % debenture of Rs.100 each at premium of 10% ,which are redeemable after 10 years at a premium of 20%.The amount of loss on redemption of debenture to be written off every year =?


62) Which of the following is True with respect to 10% debentures issued at a discount of 20% ?


63) which of the following is false ?


64) Discount on issue of debenture is an


65) On May 01,2003 U ltd .issued 7% 40,000 convertible debenture of Rs.100 each at a premium of 20%.Interest is payable on September 30 & March 31 every year. Assuming that the interest runs from the date of issue, the amount of interest expenditure debited to profit & loss account for the year ended March 31,2005=?


66) Which of the following is False with respect to debentures ?


67) Which of the following is false ?


68) Which of the following is not a characteristics of Bearer Debenture ?


69) debenture is


70) debenture contains provision as regards


71) which debenture are secured by a charge


72) debenture interest


73) fully Secured debentures are those which are secured


74) convertible debentures are those debentures which are


75) interest is paid to the person who produces the interest coupon attached to debenture in case of


76) from the point of view of mode of redemption , the debenture are classified as


77) from the point of view of tenure , the debenture are classified as


78) from the point of view of security , the debenture are classified as


79) from the point of view of registration , the debenture are classified as


80) which of the following is false ?


81) which of the following is false ?


82) which of the following is false ?


83) which of the following is / are true with respect to debenture


84) debenture trustees are to be appointed in case of issue of


85) who is not eligible to be appointed as debenture trustee


86) in case of an issue of a debenture of Rs.100 at Rs.110, Rs.10 is to be credited to


87) in case of an issue of a debenture of Rs.100 at Rs.100, but redeemable at Rs.106 ,Rs.6 is to be is to be


88) debenture account is


89) debenture premium account is


90) debenture redemption premium account is


91) in the balance sheet of a company , debenture account appears under the head


92) in the balance sheet of a company , debenture premium account appears under the head


93) in the balance sheet of a company , debenture redemption premium account appears under the head


94) A ltd took over the asset of Rs.6,60,000 & liabilities of Rs.80,000 of B ltd .for an agreed purchase consideration of Rs.6,00,000 payable 10% in cash & the balance by the issue of 15% debenture of Rs..100 each at 10% discount.the number of debenture to be issued is


95) A ltd took over the asset of Rs.3,00,000 & liabilities of Rs.10,000 of B ltd .for an agreed purchase consideration of Rs.2,70,000 to be satisfied by the issue of 15% debenture of Rs.100 each at 20% premium


96) R ltd purchased Land & building from S company for a book value of Rs.4,00,000.The consideration was paid by issue of 12% debenture of Rs.100.each at a discount of 20%..The debenture account was credited with


97) X ltd has issued 10,000,12% debenture of Rs.100 each at a premium of 10% which are redeemable after 10 years at a premium of 20%.The amount of loss on redemption of debenture to be written off every year


98) interest on debenture in calculated on


99) X ltd has issued 500, 15% debenture of Rs.100 each at a discount of 10% which are redeemable after 4 years at a premium of 5% . The amount of annual interest of debenture is


100) in the balance sheet of a company ,interest accrued & due on debenture appears under the head


101) in the balance sheet of a company ,interest accrued but not due on debenture appears under the head


102) Z ltd .issued 15% 500 debenture of Rs.100 each on 1-05-2006 at a discount of 10% redeemable at a premium of 5% after 4 years ..Interest is payable half yearly on June 30 & dec. 31 every year. the amount of interest paid for the year ended March 31,2007 = ?


103) Z ltd .issued 15% 500 debenture of Rs.100 each on 1-05-2006 at a discount of 10% redeemable at a premium of 5% after 4 years ..Interest is payable half yearly on June 30 & dec. 31 every year. the amount of interest debited to profit & loss account for the year ended March 31,2007 = ?


104) Z ltd .issued 15% 500 debenture of Rs.100 each on 1-05-2006 at a discount of 10% redeemable at a premium of 5% after 4 years ..Interest is payable half yearly on June 30 & dec. 31 every year. the amount of interest accrued but not due to be shown in the b/s as at March 31,2007 = ?


105) which of the following is not true with regards to 10% debentures issued at a discount of 20% ?


106) A -------- is a bond issued by Company under its seal, acknowledging a debt and containing provisions as regards repayment of the principle and interest.


107) Debenture holder are -


108) Debenture can be -
I. Mortgage Debentures or Bearer Debentures.
II Registered Debentures or Bearer Debentures
III. Redeemable Debentures or Irredeemable Debentures.
IV. Convertible Debenture or Non-convertible Debentures.


109) Which of the following is not a characteristic of Bearer Debenture?


110) Debentures which are secured by a charge upon some or all assets of the Company are known as -


111) Non-convertible Debenture refer to -


112) Which of the following is incorrect ?


113) Which of the following statement false?


114) In the event of liquidation of the Company the Debenture holder have prior right for -


115) A Debentures holder gets


116) Interest payable holder gets -


117) Which of the following is false?


118) Which of the following statement is not true?


119) As per the Companies Act, "Interest accrued and not due Debentures" should be shown -


120) As per the Companies Act "Interest accrued and due on Debentures" should be shown -


121) Income tax deducted from interest paid on Debentures is shown as -


122) A Company issued 1,000, 12% Debentures of Rs.100 each at par redeemable at 10% premium. 12% stands for -


123) T Ltd has issued 15% Debentures of Rs.20,00,000 at a discount of 10% on 1st April 2008 and the Company pays interest half yearly on June 30th, and Debentures 31 every year.
On 31st March 2009, the amount shown as "interest accrued but not due" in the Balance Sheet will be -


124) T Ltd issued 14% Debentures of Rs.10,00,000 at a discount of 10% on 1st April 2008 and the Company pays interest half yearly on June 30, and December 31 every year. On 31st March 2009, the amount shown as "interest due but not paid" in the Balance Sheet will be -


125) On 1st May 2008, Ltd issued 6%, 10,000 Convertible Debentures of Rs.100 each at a Premium of 20%. Interest is payable on 30th September and 31st March every year. Assuming that the interest runs from the date of issue, the amount runs from the date of issue, the amount of interest expenditure debited to P and L A/c for the year ended 31st March 2009 will be -


126) On 1st May 2008, Y Ltd issued 7% 40,000 convertible Debentures of Rs.100 each at a Premium of 20%. Interest is Payable on Septembers 30 and March 31, every year. Assuming that the interest runs from the date of issue, the amount of interest expenditure debited to P and L A/c for the year ended 3st March 2009 -


127) On 1st June 2008, Harsh Ltd. issued 4,000 9% convertible Debentures of Rs.100 each at a Premium of 10%. Interest is payable on 30th Sept. and 31st March every year. Assuming that the interest runs from the date of issue, the amount of interest expenditure debited to P and L A/c for the year ended 31st March 2009 will be -


128) The interest on Debentures for the first year ending 31.03.2008 will be -


129) The interest on Debentures for the second year ending 31.03.2010 will be -


130) The interest on Debentures for the third year third year ending 31.03.2010 will be -


131) Debentures can be issued -


132) Which of the following is incorrect with respect of Debentures?


133) Which of the following statements is false?


134) Which of the following Statements is false?


135) The underwriting commission in case of issue of Debentures can not exceed -


136) Kena Ltd issued 10,000, 12% Debentures of Rs.100 each at a discount of 10% payable in full on application by 31st March, 2009.Application were received for 12,000 Debentures. Debentures were allotted on 9th June,2009. The amount of excess money refunded on the same date will be -


137) When Debentures are issued as collateral security to a banker, which account will be debited -


138) When Debentures are issued as collected security, which entry was has to be passed -


139) When Debentures are issued as collateral security, interest is paid on -


140) Premium on issue of Debentures can be utilized for writing off -


141) Premium on redemption of Debenture is generally provided at the time of -


142) Sure Ltd issued 5,000, 15% Debentures of Rs.100 each at a premium of Rs.10 each. These Debentures were to be redeemed at a premium of Rs.4 each after 5 years. The amount to be credited to the Debentures premium account will be -


143) Koina Ltd. issued 15,00,000, 12 % Debentures of Rs.50 each at premium of 10% payable as Rs.20 on application and balance on allotment. Debentures are redeemable at par after 6 years. All the money due on allotment was called up and received. The amount of premium will be -


144) Which of the following is true with regard to 10% Debentures issued at a discount of 20% ?


145) Loss on issue of Debentures is treated as -


146) Loss on issue of debentures is generally written off in -


147) Unless written off, the loss on issue of Debenture is shown -


148) A Company issue 14% Debentures of Rs.10,00,000 at a discount of 10%. The discount allowed will be treated in the account books as -


149) Gama Ltd issued 10,000, 10% Debentures of Rs.100 each at a discount of 10%. The entire amount is payable on application were received for 12,000 Debentures. The allotment of Debentures was made on 10th October 2008. The amount which should be credited to the Debentures account on 10th October, 2008 will be -


150) W Ltd issued 40,000, 8% Debentures of Rs.10 each at par, which are redeemable after 5 years at a premium of 20%. The amount of loss on redemption Debentures to be written of every years will be -


151) Asha Deep Ltd issued 1,00,000, 7% Debentures of Rs.100 each at a discount of 4% redeemable after 5 years at a premium of 6%. Loss on issue of Debentures is -


152) A Ltd issued Rs.1,00,000 12% Debentures at 5% discount redeemable at 5% premium after 10 years. Loss on issue of Debentures will be -


153) X Ltd issued 1,00,000 Debentures of Rs.100 each at a discount of 4% redeemable after 5 years at a premium of 6%. Loss on issue of Debenture will be -


154) A Company issued Debentures of the face value of Rs.1,00,000 at a discount of 6% on 1st January 2009. These Debentures are redeemable by annual drawings of Rs.20,000 made on 31st December each year. The Directors decided to write off discount based on the Debentures outstanding each year. Amount of discount to be written off in the 5th year will be -


155) Deep Ltd issued 1,00,000 7% Debentures of Rs.100 each at a discount of 4% redeemable after 5 year at a premium of 6%. Loss of issues of debentures is -


156) K Ltd issued 5,000, 12% Debentures of Rs.100 each at a discount of 5% repayable after 5 years at a premium of 5%. The loss on issue of Debentures to be written off for 5 years -


157) L Ltd issued Rs.1,00,000, 12% Debentures [par value of Rs.100] each at a discount of 5% on 1st January 2009 repayable by 4 equal annual drawings at a premium of 5%. The loss on issue of Debentures to be written off for 4 calendar years -


158) The amount of discount to be written off at the end of each year for the first 5 years is -


159) The amount of discount to be written off at the end of each year for the next 5 years is -


160) The amount of discount to be written off at the end of each year for the last 5 years is -


161) The amount of discount to be written off at the end of the first years is -


162) The amount of discount to be written off at the end of the second year is -


163) The amount of discount to be written off at the end of the third year is -


164) The amount of discount to be written off at the end of the fourth year is -


165) The amount of discount to be written off at the end of the fifth year is -


166) If the redeemable commences from 31st March 2010 -


167) If the redemption commences from 31st March 2011 -


168) If the redemption commences from 31th March 2012 -


169) C Ltd issued Rs.1,00,000 Debentures at a discount of 6% on 1st January 2009 repayable by 5 equal annual drawing. Discount on issue of Debentures written off in the 5 calendar years -


170) E Ltd issued 1,00,000 Debentures at discount of 6% on 1st April, 2009 repayable by 5 equal annual drawing. Discount on issue of debentures written off in the 5 Calendar years -


171) F Ltd issued Rs.1,00,000, 10% Debentures on 1st April, 2009 at a discount of 5% payable in annual drawings of Rs.25,000 each on 31st March every year. Calculate the amount of discount to be written off each year. The accounting year of the Company ends on 31st December.


172) G Ltd. issued 12% Debentures of the face value of Rs.1,20,000 at a discount of 6% on 1st January, 2009 repayable by annual drawings of Rs.40,000 commencing from the end of 3rd year. Discount on issue of Debentures written off every year for 5 years assuming that the account are closed on 31th December.


173) If Debentures are issued as consideration for purchase of any Fixed Asset, the entry is -


174) G Ltd Purchased Land and Building from H Ltd for a book value of Rs.2,00,000. The consideration was paid by issue of 12% Debentures of Rs.100 each at a discount of 20%. The Debentures account is credited with -


175) F Ltd purchased Machinery from G Company for a book value of Rs.4,00,000. The consideration was paid by issue of 12% Debentures of Rs.100 each discount of 20%. The Debentures account is credited by -


176) How many Debentures will a Company be required to issue for satisfying the purchase consideration of Rs.28,80,000, if Debentures of Rs.100 are issued at a premium of 20 per Debenture?


177) J Ltd purchased a Building for Rs.9,00,000 and consideration was paid by issuing 12% Debentures of Rs.100 each at 10% discount. The number of Debentures issued were -


178) K Ltd brought a Machinery for Rs.4,00,000 payable as to Rs.1,30,000 in cash and the balance by issue of 12% Debentures of Rs.100 each at 10% discount. Number of Debentures issued is -


179) X Ltd purchased a plant for Rs.20,000 payable Rs.6,500 in cash and balance by issue of 13% Debentures of Rs,100 each at a discount of 10%. How many Debentures would be required to be issued to the Vendor


180) The Company has -


181) The Debentures were issued -


182) Debentures can be redeemed out of -


183) Debentures cannot be redeemed at -


184) Premium or redemption of Debentures is a -


185) Which of the following statements is true ?


186) when Debentures are to be redeemed at premium an extra entry has to be made at the time of issue of Debentures. Which A/c should be credited in this entry ?


187) If Debentures are issued at discount and redeemed premium -


188) Green Ltd issued 5,000, 6% Debentures of Rs.100 each at a discount of 5% repayable after 5 years at a premium of 5%. Total loss on issue of Debentures will be -


189) Ravi Ltd issued 1,40,00,000, 9% Debentures of Rs.100 each at a discount of 6%, redeemable at a premium of 5% after 3 year payable as Rs.50 on application and Rs.44 on allotment. Total amount of discount/loss on issue of Debenture will be -


190) Debentures have been issued at a discount of -


191) Debentures are redeemable at a premium of -


192) At the time of issue, entry to be passed will be -


193) If the Debentures were initially issued at 10% discount, at the time of issue, the entry to be passed will be ?


194) If the Debentures were issued at 10% premium but redeemed at par, entry will be -


195) Win Ltd issued 20,000,8% Debentures of Rs.10 each at par, which are redeemable after 5 years at a premium of 20%.
The amount of loss on redemption of Debentures to be written off every year will be -


196) Alfa Ltd issued 20,000,8% Debentures of Rs.10 each at par. The Debentures are redeemable at a premium of 20% after 5 years. The amount of loss on redemption of Debenture should be -


197) P Ltd issued 5,000, 12% Debentures of Rs.100 each at a premium of 10%, which are redeemable after 10 year at a premium of 20%. The amount of loss on redemption of Debentures to be Written off every year is -


198) ABC Co. Ltd issued Rs.1,00,000, 11% Debentures at 95% redeemable at the end of 10 years at 102%. The entry is -


199) ABC Co. Ltd issued Rs.1,00,000, 11% Debentures at 95% redeemable at the end of 10 years at 98%


200) P Ltd issued 10,000, 12% Debentures of Rs.100 each at a premium of 10%, which are redeemable after 10 years at a premium of 20%. The amount of loss on redemption of Debentures to be written off every will be -


201) W Ltd issued 20,000, 8% Debentures or Rs.10 each at par, which are redeemable after 5 year at a premium of 20%. The amount of loss on redemption of Debentures to be written off every year -


202) A Ltd issued 10,000, 12% Debentures of Rs.10 each at par which are redeemable in 5 years at the end of each year in equal lots at a premium of 30%. The amount of loss on redemption of Debentures to be written off in 4th and 5th year will be -


203) Profit on cancellation of own Debentures is transferred to -


204) Which of the following statement is false?


205) _______ is acknowledgment of debt under common seal of company.


206) The issue of debenture at its face value is called the issue______


207) _______ Debentures which are recorded in register of company.


208) The issue of debentures less than the face value is called.


209) The debentures which are converted into shares is called________


210) The issue of debentures more than face value is called_______


211) _______ Debentures of which the amount is repaid after specific period.


212) _______ Debentures which are not secured against any charge on assets of the company.


213) The interest on debentures is transferred to ______


214) The debenture holder is _____ of the company.


215) The amount of interest payable to the debenture holder is______


216) Debenture holders get income in the form of_____


217) Convertible debentures are converted into_______


218) The debenture is owner of the company.


219) The acknowledgement of debt under common seal of the company in termed as share.


220) The amount of irredeemable debentures is not paid in the lifetime of the company.


221) The issue of debentures less than face value of debenture to be termed as issue of debentures at discount.


222) The debentures are known as creditorship capital of the company.


223) The unregistered debentures are known as naked debentures.


224) The rate of interest of debentures in attached to the debentures.


225) Unsecured debentures are safer than secured debentures.


226) The issue of debenture more than face value is termed on issue of debentures at par.


227) Premium an issue of debentures is recorded on the asset side of Balance sheet.


228) Debenture capital is a Loan capital of the company.


229) A debenture holder is a debtor of the company.


230) Debenture holders get dividend.


231) Debentures are never redeemed by the company.


232) Premium on redemption of debentures account appearing in the balance sheet is _______.


233) Which of the following is not a characteristic of Bearer Debentures?


234) When debentures are redeemable at different dates, the total amount of discount on issue of debentures should be written off