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Introduction to Debentures (Contents) Video Lecture | Accountancy Class 12 - Commerce
FAQs on Introduction to Debentures (Contents) Video Lecture - Accountancy Class 12 - Commerce
| 1. What is a debenture? |  |
Ans. A debenture is a type of long-term debt instrument issued by a company or government to raise funds. It is a written acknowledgement of debt that specifies the terms and conditions of repayment, including the interest rate and maturity date.
| 2. How are debentures different from shares? | |
Ans. Debentures and shares are both financial instruments used by companies to raise capital, but they have some key differences. While debentures represent debt and provide the holder with fixed interest payments and repayment of principal, shares represent ownership in the company and provide the shareholders with dividends and voting rights.
| 3. What are the different types of debentures? | |
Ans. There are several types of debentures, including convertible debentures, non-convertible debentures, secured debentures, unsecured debentures, redeemable debentures, and irredeemable debentures. Each type has its own unique features and characteristics.
| 4. How do debentures benefit investors? | |
Ans. Debentures offer several benefits to investors. They provide a fixed and regular income stream in the form of interest payments. Debentureholders also have a higher claim on the company's assets in case of bankruptcy or liquidation compared to shareholders. Additionally, debentures can be easily traded in the secondary market, providing liquidity to investors.
| 5. What are the risks associated with investing in debentures? | |
Ans. While debentures are considered a relatively safer investment compared to shares, they still carry some risks. The main risk is the possibility of default, where the issuer is unable to make interest payments or repay the principal amount. Other risks include interest rate risk, where changes in interest rates affect the value of the debenture, and liquidity risk, where it may be difficult to sell the debentures in the secondary market. Investors should carefully assess these risks before investing in debentures.
Text Transcript from Video
by the end of this session on issue of
debentures you will understand what are
the benches what is the difference
between a debenture and a share but are
the accounting entries involved in the
issue of debentures the accounting
entries and the accounting treatment
with respect to interest on debentures
and discount on issue of debentures an
entire discussion would be structured as
below we will first define what are
dimensions we first define dimensions
understand what are dimensions what is
the difference between a dimension and a
share what are the features of
dimensions what are the types of
dimensions
ready mobile irredeemable convertible
non-convertible secured unsecured etc
etc then we would discuss the accounting
entries on issue of dimensions at the
time of issue of debentures the terms of
issue of debentures also normally
contain the terms of redemption so we
will discuss both the accounting entries
an issue and redemption of dimensions
when we discuss entries these are
entries for issue of debentures for cash
we may also issue dimensions as
collateral security we may also issue
dimensions for consideration other than
cash what it means what are the
accounting in place etc will all be
discussed next we will move on to the
treatment of discount on issue of
dimensions and the treatment of interest
on dementias debenture interest we wind
up with a final quiz in between also we
have two short quizzes - more or less
test our understanding of concepts which
are discussed
debentures you will understand what are
the benches what is the difference
between a debenture and a share but are
the accounting entries involved in the
issue of debentures the accounting
entries and the accounting treatment
with respect to interest on debentures
and discount on issue of debentures an
entire discussion would be structured as
below we will first define what are
dimensions we first define dimensions
understand what are dimensions what is
the difference between a dimension and a
share what are the features of
dimensions what are the types of
dimensions
ready mobile irredeemable convertible
non-convertible secured unsecured etc
etc then we would discuss the accounting
entries on issue of dimensions at the
time of issue of debentures the terms of
issue of debentures also normally
contain the terms of redemption so we
will discuss both the accounting entries
an issue and redemption of dimensions
when we discuss entries these are
entries for issue of debentures for cash
we may also issue dimensions as
collateral security we may also issue
dimensions for consideration other than
cash what it means what are the
accounting in place etc will all be
discussed next we will move on to the
treatment of discount on issue of
dimensions and the treatment of interest
on dementias debenture interest we wind
up with a final quiz in between also we
have two short quizzes - more or less
test our understanding of concepts which
are discussed
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