CA Foundation Exam > CA Foundation Questions > In the balance sheet of a Company, Debentures...
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In the balance sheet of a Company, Debentures are shown under the head:
- a)Secured Loans
- b)Unsecured Loans
- c)Reserves and Surplus
- d)Current liabilities
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
In the balance sheet of a Company, Debentures are shown under the head...
Debentures are a type of long-term borrowing for companies. In the balance sheet of a company, debentures are shown under the head of secured loans. Let us understand this in detail:
Secured Loans:
Secured loans are loans that are backed by some form of collateral or security. In the case of debentures, the company issues debentures to investors and offers some form of security as collateral. This collateral could be in the form of assets, properties, or other securities. As debentures are backed by collateral, they are considered as secured loans.
Unsecured Loans:
Unsecured loans are not backed by any collateral or security. In the case of unsecured loans, the lender relies on the borrower's creditworthiness and reputation. Debentures are not considered as unsecured loans as they are backed by some form of collateral.
Reserves and Surplus:
Reserves and surplus are the profits that a company has accumulated over the years. These profits are retained by the company and are not distributed as dividends. Debentures are not considered as reserves and surplus as they are a type of borrowing.
Current Liabilities:
Current liabilities are the obligations that a company needs to pay within a year. Debentures are a type of long-term borrowing and are not considered as current liabilities.
In conclusion, the correct answer is option 'A' as debentures are shown under the head of secured loans in the balance sheet of a company.
Secured Loans:
Secured loans are loans that are backed by some form of collateral or security. In the case of debentures, the company issues debentures to investors and offers some form of security as collateral. This collateral could be in the form of assets, properties, or other securities. As debentures are backed by collateral, they are considered as secured loans.
Unsecured Loans:
Unsecured loans are not backed by any collateral or security. In the case of unsecured loans, the lender relies on the borrower's creditworthiness and reputation. Debentures are not considered as unsecured loans as they are backed by some form of collateral.
Reserves and Surplus:
Reserves and surplus are the profits that a company has accumulated over the years. These profits are retained by the company and are not distributed as dividends. Debentures are not considered as reserves and surplus as they are a type of borrowing.
Current Liabilities:
Current liabilities are the obligations that a company needs to pay within a year. Debentures are a type of long-term borrowing and are not considered as current liabilities.
In conclusion, the correct answer is option 'A' as debentures are shown under the head of secured loans in the balance sheet of a company.
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In the balance sheet of a Company, Debentures are shown under the head...
Non current liabilities
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In the balance sheet of a Company, Debentures are shown under the head:a)Secured Loansb)Unsecured Loansc)Reserves and Surplusd)Current liabilitiesCorrect answer is option 'A'. Can you explain this answer?
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