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CPT Section A:Fundamentals of Accounting  Chapter 9 Unit 4 
CA. Pankaj Goel 
 
Page 2


CPT Section A:Fundamentals of Accounting  Chapter 9 Unit 4 
CA. Pankaj Goel 
 
MCQs 
94 
Page 3


CPT Section A:Fundamentals of Accounting  Chapter 9 Unit 4 
CA. Pankaj Goel 
 
MCQs 
94 
(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 
Answer: C 
95 
Page 4


CPT Section A:Fundamentals of Accounting  Chapter 9 Unit 4 
CA. Pankaj Goel 
 
MCQs 
94 
(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 
Answer: C 
95 
(a) A real account 
(b) A nominal account – income 
(c) A personal account 
(d) A nominal account – expenditure 
Answer:C 
96 
Page 5


CPT Section A:Fundamentals of Accounting  Chapter 9 Unit 4 
CA. Pankaj Goel 
 
MCQs 
94 
(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 
Answer: C 
95 
(a) A real account 
(b) A nominal account – income 
(c) A personal account 
(d) A nominal account – expenditure 
Answer:C 
96 
(a) At maturity, debenture holders get back their money as per 
the terms and conditions of redemption 
(b) Debentures can be forfeited for non payment of call money 
(c) In company’s balance sheet, debentures are shown under 
secured loans 
(d) Interest on debentures is charged against profits 
Answer:B 
97 
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FAQs on MCQ - Debentures - Principles and Practice of Accounting - CA Foundation

1. What are debentures?
Ans. Debentures are long-term debt instruments issued by companies to borrow money from the public or financial institutions. They are typically unsecured and carry a fixed rate of interest.
2. How are debentures different from shares?
Ans. Debentures represent borrowed funds and are considered as a liability for the company issuing them. On the other hand, shares represent ownership in the company and are considered as equity. Debenture holders are creditors of the company, whereas shareholders are owners.
3. Can debentures be converted into shares?
Ans. Yes, some debentures come with an option to convert them into shares of the issuing company at a predetermined ratio. This feature is known as convertible debentures.
4. What is the difference between secured and unsecured debentures?
Ans. Secured debentures are backed by specific assets of the company, which act as collateral in case of default. Unsecured debentures, on the other hand, are not backed by any specific assets and rely solely on the creditworthiness of the issuing company.
5. What is the role of a debenture trustee?
Ans. A debenture trustee is appointed to represent the interests of the debenture holders. They ensure that the company fulfills its obligations towards the debenture holders, such as timely payment of interest and principal amount. The trustee also takes necessary actions in case of default or any breach of terms by the company.
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