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Direction: Choose the correct answer to the following questions from the given alternatives:
When debentures are redeemed out of profits, an equal amount is transferred to:
  • a)
    General reserve,
  • b)
    Debenture redemption reserve,
  • c)
    Capital reserve.
  • d)
    None of these 
Correct answer is option 'B'. Can you explain this answer?
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Direction: Choose the correct answer to the following questions from t...
Explanation:


  • Redemption of Debentures: When debentures are redeemed out of profits, an equal amount is transferred to the Debenture Redemption Reserve.

  • Debenture Redemption Reserve: This reserve is created to ensure that funds are available for the redemption of debentures when they fall due.

  • Legal Requirement: As per the Companies Act, companies are required to create a Debenture Redemption Reserve before redeeming debentures out of profits.

  • Protection of Investors: The creation of the Debenture Redemption Reserve protects the interests of debenture holders by ensuring that there are sufficient funds set aside for redemption.

  • General Reserve vs. Debenture Redemption Reserve: While a General Reserve is a reserve created out of profits for general business purposes, the Debenture Redemption Reserve is specifically earmarked for the redemption of debentures.

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Direction: Choose the correct answer to the following questions from the given alternatives:When debentures are redeemed out of profits, an equal amount is transferred to:a)General reserve,b)Debenture redemption reserve,c)Capital reserve.d)None of theseCorrect answer is option 'B'. Can you explain this answer?
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Direction: Choose the correct answer to the following questions from the given alternatives:When debentures are redeemed out of profits, an equal amount is transferred to:a)General reserve,b)Debenture redemption reserve,c)Capital reserve.d)None of theseCorrect answer is option 'B'. 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 Direction: Choose the correct answer to the following questions from the given alternatives:When debentures are redeemed out of profits, an equal amount is transferred to:a)General reserve,b)Debenture redemption reserve,c)Capital reserve.d)None of theseCorrect answer is option 'B'. 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 Direction: Choose the correct answer to the following questions from the given alternatives:When debentures are redeemed out of profits, an equal amount is transferred to:a)General reserve,b)Debenture redemption reserve,c)Capital reserve.d)None of theseCorrect answer is option 'B'. Can you explain this answer?.
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