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Test: Company Accounts Issue Of Debentures - 2


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20 Questions MCQ Test Accountancy Practice Tests: CUET Preparation | Test: Company Accounts Issue Of Debentures - 2

Test: Company Accounts Issue Of Debentures - 2 for Commerce 2022 is part of Accountancy Practice Tests: CUET Preparation preparation. The Test: Company Accounts Issue Of Debentures - 2 questions and answers have been prepared according to the Commerce exam syllabus.The Test: Company Accounts Issue Of Debentures - 2 MCQs are made for Commerce 2022 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Company Accounts Issue Of Debentures - 2 below.
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Test: Company Accounts Issue Of Debentures - 2 - Question 1

What is the nature of rent paid to a partner?

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 1

Rent paid to a partner is an expense for the business. All expenses and losses are considered as Nominal account. Rent paid to partner is a charge against the profit and it will be paid whether there is profit or loss in the business.

Test: Company Accounts Issue Of Debentures - 2 - Question 2

Payment of debentures is made before the ________

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 2

At the time of liquidation the payment to debenture holders is made on the priority bases and then to the shareholders.

Test: Company Accounts Issue Of Debentures - 2 - Question 3

A debenture holder has no________

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 3

In a company only those people are shareholder can vote but debenture holders are not allowed to vote. The simple reason is debenture holders are treated as outsiders and shareholders are treated as insiders.

Test: Company Accounts Issue Of Debentures - 2 - Question 4

Debentures are generally secured by __________

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 4

Debentures are generally secured by a charge on assets. It shows that debentures are not issued for cash or kind but have been issued as a security for the loan obtained.

Test: Company Accounts Issue Of Debentures - 2 - Question 5

A company can issue its debentures at _________

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 5

A company can issue its shares at par, premium and discount. But shares cannot be issued at discount.

Test: Company Accounts Issue Of Debentures - 2 - Question 6

Non-Convertible Debentures -----

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 6

Nonconvertible debentures are those which cannot be converted into shares. These debentures are entitled for interest and can be redeemed normally at the time of maturity.

Test: Company Accounts Issue Of Debentures - 2 - Question 7

Debenture holders do not have right for ____

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 7

Debenture holders do not have dividend right. They can’t claim for dividend because dividend is only for the shareholders. Debenture holders get a fixed interest annually.

Test: Company Accounts Issue Of Debentures - 2 - Question 8

The following are the types of debentures except

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 8

There are different types of debentures except Equity Debentures.
(i) Redeemable Debentures
(ii) Perpetual Debentures
(iii) Convertible Debentures
(iv) Coupon Rate Debentures

Test: Company Accounts Issue Of Debentures - 2 - Question 9

Which of the following statement is not correct?

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 9

Debentures are safe in comparison of shares. Debentures are almost risk free because most of the time they are secured by a charge on the assets of the company.

Test: Company Accounts Issue Of Debentures - 2 - Question 10

Match the following types of debentures

Options are

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 10

(i) Security debentures are those which are secured by a fixed charge.
(ii) Priority Debentures are repaid before the other debentures.
(iii) Convertible debentures are those which can be converted into shares.

Test: Company Accounts Issue Of Debentures - 2 - Question 11

Why is premium on the issue of debentures considered as a capital profit

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 11

Premium on issue of debentures is considered as capital profit because it is not earned by the normal course of business operations. Any profit or gain earned by the company which is not part of the normal operating business is termed as capital profit.

Test: Company Accounts Issue Of Debentures - 2 - Question 12

When an instrument is issued without interest rate and issue price is thereby discounted, the issue of such instrument is called ----

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 12

Sometimes a company issue an instrument on which rate of interest is not pre-determined. Such instruments are called Bond.

Test: Company Accounts Issue Of Debentures - 2 - Question 13

Vinod Limited has 5,000, 11% Debentures which are to be redeemed within the 8 Months from the date of previous balance sheet. How will you show these debentures in the balance sheet?

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 13

When debentures become due for the redemption they are shown under the heading of Current Liabilities and sub heading Other Current Liabilities.

Test: Company Accounts Issue Of Debentures - 2 - Question 14

Interest on debentures will be paid to debenture holders _________

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 14

Interest on debentures is a charge against the profit. It means it will be paid whether the firm is in profit or loss. It will reduce the profit of the firm or it will increase the loss of the firm.

Test: Company Accounts Issue Of Debentures - 2 - Question 15

Vinod Limited issued 12%, 1,000 Debentures @ 100 each at a premium of 10%. What will be the first journal entry?

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 15

Following journal entry will be recorded for the issue of debentures:
Bank A/c Dr.    1,10,000
To Debentures App. & Allot. A/c   1,10,000
Note: In this entry there is no need to show premium separately.

Test: Company Accounts Issue Of Debentures - 2 - Question 16

Debentures cannot be issued by_________

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 16

A sole proprietor firm cannot issue debentures. Only those firms which are registered under the Companies Act, 2013 or before can issue debentures with the permission of SEBI.

Test: Company Accounts Issue Of Debentures - 2 - Question 17

Vinod Limited invited applications for 2,000, 11% Debentures @ 100 each. The issue was oversubscribed by 5 times. What is this situation called?

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 17

When a company receives more applications for the debentures than the actual debentures offered for the subscription, it is known as over subscription.

Test: Company Accounts Issue Of Debentures - 2 - Question 18

While passing the entry for refund of money if the applications are rejected. Which account should be credited

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 18

When a company reject excess debenture applications received and paid back their money, in such a case bank account should be credited with the amount to be refunded to the applicants.

Test: Company Accounts Issue Of Debentures - 2 - Question 19

Vinod Limited invited applications for 2,000, 11% Debentures @ 100 each. The company received application only for 1900 debentures. What is this situation called?

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 19

When a company receives less applications for the debentures than the actual debentures offered for the subscription, it is known as under subscription.

Test: Company Accounts Issue Of Debentures - 2 - Question 20

A debenture of Rs. 100 is issued at Rs. 110.It is an example of

Detailed Solution for Test: Company Accounts Issue Of Debentures - 2 - Question 20

When a company issue its debentures at a price more than its actual price, it is known as debentures issued at premium.

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