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Test: Company Accounts Issue Of Debentures - 1 - Commerce MCQ


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10 Questions MCQ Test - Test: Company Accounts Issue Of Debentures - 1

Test: Company Accounts Issue Of Debentures - 1 for Commerce 2024 is part of Commerce preparation. The Test: Company Accounts Issue Of Debentures - 1 questions and answers have been prepared according to the Commerce exam syllabus.The Test: Company Accounts Issue Of Debentures - 1 MCQs are made for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Company Accounts Issue Of Debentures - 1 below.
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Test: Company Accounts Issue Of Debentures - 1 - Question 1

This a MCQ (Multiple Choice Question) based practice test of Chapter 7 - Company Accounts Issue of Debentures of Accountancy of Class XII (12) for the quick revision/preparation of School Board examinations

Q  Debenture Application Accounts is :

Detailed Solution for Test: Company Accounts Issue Of Debentures - 1 - Question 1

The correct answer is A: Personal Account.
Explanation:
Debenture Application Accounts is categorized as a Personal Account. Here's why:
1. Definition: A Personal Account is an account that represents individuals, organizations, or groups with whom a business entity has a financial relationship. It includes accounts of persons, firms, and companies.
2. Characteristics of Personal Account:
- Personal accounts record transactions with real persons or artificial persons (like companies).
- These accounts are classified into three categories: Natural, Artificial, and Representative Personal Accounts.
- Natural personal accounts are related to individuals. For example, accounts of customers, suppliers, owners, etc.
- Artificial personal accounts are related to organizations, institutions, or companies. For example, accounts of banks, companies, etc.
- Representative personal accounts are related to individuals or organizations acting on behalf of others. For example, accounts of agents, trustees, etc.
3. Debenture Application Accounts:
- Debenture Application Accounts are opened when a company invites applications from the public to subscribe to its debentures.
- These accounts record the amount of money received from individuals or organizations who have applied for the company's debentures.
4. Reason for Categorization as Personal Account:
- Debenture Application Accounts represent individuals or organizations who have applied for the company's debentures.
- These accounts are maintained to keep track of the amounts received from the applicants.
- As these accounts represent specific individuals or organizations, they fall under the category of Personal Accounts.
In conclusion, Debenture Application Accounts are categorized as Personal Accounts because they represent the individuals or organizations who have applied for the company's debentures.
Test: Company Accounts Issue Of Debentures - 1 - Question 2

Debenture Allotment Account is:

Detailed Solution for Test: Company Accounts Issue Of Debentures - 1 - Question 2

Debenture Allotment Account is a personal account. It is Representative Personal Account.

Test: Company Accounts Issue Of Debentures - 1 - Question 3

Premium on Redemption of Debentures Account is:

Detailed Solution for Test: Company Accounts Issue Of Debentures - 1 - Question 3

Premium on Redemption of Debentures Account is a personal account. It is shown in the balance sheet (as premium due). Premium payable on redemption is treated as a loss and should be written off against the Statement of P/L.

Test: Company Accounts Issue Of Debentures - 1 - Question 4

Debenture Holders are the:

Detailed Solution for Test: Company Accounts Issue Of Debentures - 1 - Question 4

Debenture holders are the creditors of a company because they are paid first at the time liquidation. Their payment is fixed, which has to be paid either firm is in profit or loss.

Test: Company Accounts Issue Of Debentures - 1 - Question 5

Discount on issue of debentures account is a …..

Detailed Solution for Test: Company Accounts Issue Of Debentures - 1 - Question 5

Discount on issue of debentures is treated as a fictitious asset and should be written off against the Statement of Profit and Loss.

Test: Company Accounts Issue Of Debentures - 1 - Question 6

Securities Premium received on debentures is a…….

Detailed Solution for Test: Company Accounts Issue Of Debentures - 1 - Question 6

Securities Premium received is a capital profit for a firm which is shown in the balance sheet under the heading Reserves and Surplus.

Test: Company Accounts Issue Of Debentures - 1 - Question 7

How would you show Debentures in the Balance sheet i.e. under which heading?

Detailed Solution for Test: Company Accounts Issue Of Debentures - 1 - Question 7

Debentures issued are shown under the heading of Non-current liabilities and sub-heading Long Term Borrowings.

Test: Company Accounts Issue Of Debentures - 1 - Question 8

Shareholders get dividend, Debenture holders get:

Detailed Solution for Test: Company Accounts Issue Of Debentures - 1 - Question 8

Shareholders are paid after the debenture holders are paid interest. Debenture holders are paid the interest before the shareholders are paid. Shareholders are paid dividend out of profits and if the company is in losses they don't get dividend.

Test: Company Accounts Issue Of Debentures - 1 - Question 9

A Debenture is acknowledgment of debt and a contract for the repayment of principal amount with________

Detailed Solution for Test: Company Accounts Issue Of Debentures - 1 - Question 9

A Debenture is acknowledgment of debt and a contract for the repayment of principal amount with interest. Interest paid on debentures is a fixed charge and will be paid whether firm is in profit or loss.

Test: Company Accounts Issue Of Debentures - 1 - Question 10

A debentures is issued under the ________ of company

Detailed Solution for Test: Company Accounts Issue Of Debentures - 1 - Question 10

A debenture is a document issued by a company as evidence of a debt to the holder usually arising out of a loan and most commonly secured by a charge. A company issue its debentures under the Common Seal of the company.

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