CA Foundation Exam > CA Foundation Questions > Which of the following statement is false?a) ...
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Which of the following statement is false?
- a)A 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
Correct answer is option 'B'. Can you explain this answer?
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Most Upvoted Answer
Which of the following statement is false?a) ...
False Statement: Debentures can be forfeited for non-payment of call money.
Explanation:
Debentures are a type of loan taken by companies from public investors. The company promises to pay back the principal amount along with interest to the debenture holders on a specified date. Debentures are a long-term source of finance for the company.
Below are the true statements related to debentures:
A. At maturity, debenture holders get back their money as per the terms and conditions of redemption: Debenture holders invest their money for a specific period, and at the end of the maturity period, they get their money back along with the interest as per the terms and conditions mentioned in the debenture certificate.
B. Debentures can be forfeited for non-payment of call money: This statement is false. Call money is the money that the company asks the debenture holders to pay at the time of issuing the debentures. If the debenture holders fail to pay the call money, the company can cancel their allocation, but it cannot forfeit the entire debenture amount.
C. In the company's balance sheet, debentures are shown under secured loans: Debentures are long-term loans taken by the company from the public, and they are secured loans. Hence, they are shown under the secured loans section in the company's balance sheet.
D. Interest on debentures is charged against profits: Interest on debentures is an expense for the company, and it is charged against profits. The company needs to pay interest on debentures irrespective of whether it makes a profit or not.
Conclusion:
Hence, the false statement related to debentures is option B, which states that debentures can be forfeited for non-payment of call money.
Explanation:
Debentures are a type of loan taken by companies from public investors. The company promises to pay back the principal amount along with interest to the debenture holders on a specified date. Debentures are a long-term source of finance for the company.
Below are the true statements related to debentures:
A. At maturity, debenture holders get back their money as per the terms and conditions of redemption: Debenture holders invest their money for a specific period, and at the end of the maturity period, they get their money back along with the interest as per the terms and conditions mentioned in the debenture certificate.
B. Debentures can be forfeited for non-payment of call money: This statement is false. Call money is the money that the company asks the debenture holders to pay at the time of issuing the debentures. If the debenture holders fail to pay the call money, the company can cancel their allocation, but it cannot forfeit the entire debenture amount.
C. In the company's balance sheet, debentures are shown under secured loans: Debentures are long-term loans taken by the company from the public, and they are secured loans. Hence, they are shown under the secured loans section in the company's balance sheet.
D. Interest on debentures is charged against profits: Interest on debentures is an expense for the company, and it is charged against profits. The company needs to pay interest on debentures irrespective of whether it makes a profit or not.
Conclusion:
Hence, the false statement related to debentures is option B, which states that debentures can be forfeited for non-payment of call money.
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Which of the following statement is false?a) ...
B
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Which of the following statement is false?a) A 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 Correct answer is option 'B'. Can you explain this answer?
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Which of the following statement is false?a) A 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 Correct 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 Which of the following statement is false?a) A 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 Correct 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 Which of the following statement is false?a) A 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 Correct answer is option 'B'. Can you explain this answer?.
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