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When debentures are issued as collateral security, the final entry for recording the transaction in the books is __________.
  • a)
    Credit debentures a/c. and debit cash a/c.
  • b)
    Debit debenture suspense a/c. and credit cash a/c.
  • c)
    Debit debenture suspense a/c. and credit debentures a/c.
  • d)
    Debit cash a/c. and credit the loan a/c. for which security is given
Correct answer is option 'C'. Can you explain this answer?
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When debentures are issued as collateral security, the final entry for...
Recording the Issue of Debentures as Collateral Security

The final entry for recording the transaction in the books when debentures are issued as collateral security is as follows:

Debit Debenture Suspense A/c and Credit Debentures A/c.

Explanation:

When debentures are issued as collateral security, the debentures are pledged as a security against a loan taken by the company. The company receives cash in exchange for the debentures pledged. The following are the steps involved in recording the transaction in the books:

1. Create a Debenture Suspense Account: A debenture suspense account is created to record the debentures issued as collateral security.

2. Debit the Debenture Suspense Account: The debenture suspense account is debited to show the increase in the debentures issued as collateral security.

3. Credit the Debentures Account: The debentures account is credited to show the decrease in the debentures held by the company.

Thus, the final entry for recording the transaction in the books is to debit the Debenture Suspense A/c and credit the Debentures A/c.

Conclusion:

When debentures are issued as collateral security, the final entry for recording the transaction in the books is to debit the Debenture Suspense A/c and credit the Debentures A/c. This entry helps in maintaining the accurate records of the debentures issued as collateral security and the debentures held by the company.
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When debentures are issued as collateral security, the final entry for...
When debentures are issued as collateral security, the final entry for recording the transaction in the books is
Debenture Suspense a/c Dr.
To debentures a/c
as per the accounting treatment.
Therefore right option is (c)
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When debentures are issued as collateral security, the final entry for recording the transaction in the books is __________.a)Credit debentures a/c. and debit cash a/c.b)Debit debenture suspense a/c. and credit cash a/c.c)Debit debenture suspense a/c. and credit debentures a/c.d)Debit cash a/c. and credit the loan a/c. for which security is givenCorrect answer is option 'C'. Can you explain this answer?
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When debentures are issued as collateral security, the final entry for recording the transaction in the books is __________.a)Credit debentures a/c. and debit cash a/c.b)Debit debenture suspense a/c. and credit cash a/c.c)Debit debenture suspense a/c. and credit debentures a/c.d)Debit cash a/c. and credit the loan a/c. for which security is givenCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about When debentures are issued as collateral security, the final entry for recording the transaction in the books is __________.a)Credit debentures a/c. and debit cash a/c.b)Debit debenture suspense a/c. and credit cash a/c.c)Debit debenture suspense a/c. and credit debentures a/c.d)Debit cash a/c. and credit the loan a/c. for which security is givenCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When debentures are issued as collateral security, the final entry for recording the transaction in the books is __________.a)Credit debentures a/c. and debit cash a/c.b)Debit debenture suspense a/c. and credit cash a/c.c)Debit debenture suspense a/c. and credit debentures a/c.d)Debit cash a/c. and credit the loan a/c. for which security is givenCorrect answer is option 'C'. Can you explain this answer?.
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