Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

Non-convertible debentures refer to.

book keeping and accountancy company accounts part - 2 (accounting for debentures) types of issue of debentures types of debentures meaning and kinds of debentures

  1. Owner's capital

  2. Loan capital

  3. Short-term fund

  4. None of these

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Correct Option: B

Debentures can be ____________.
I. Mortgage Debentures or Simple Debentures
II. Registered Debentures or Bearer Debentures
III. Redeemable Debentures or Irredeemable Debentures
IV. Convertible Debentures or Non-Convertible Debentures.

book keeping and accountancy company accounts part - 2 (accounting for debentures) types of issue of debentures types of debentures meaning and kinds of debentures

  1. Both (I) and (II)

  2. Both (I) and (III)

  3. Both (II) and (III)

  4. All of (I), (II), (III) and (IV)

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Correct Option: D

Interest payable on debentures is __________. 

book keeping and accountancy company accounts part - 2 (accounting for debentures) types of issue of debentures types of debentures meaning and kinds of debentures

  1. an appropriation of profits of the company

  2. a charge against profits of the company

  3. transferred to sinking fund interest A/c

  4. transferred to sinking fund A/c

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Correct Option: B

In case of debentures issued as collateral securities, the lender is entitled to ____________.

book keeping and accountancy company accounts part - 2 (accounting for debentures) types of issue of debentures types of debentures meaning and kinds of debentures

  1. interest only on the amount of loan

  2. interest on loan as well debentures issued as collateral security

  3. interest only on debentures issues as collateral security

  4. None of the above

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Correct Option: A

Which of the following statements is false?

book keeping and accountancy company accounts part - 2 (accounting for debentures) types of issue of debentures types of debentures meaning and kinds of debentures

  1. A company can issue convertible debentures

  2. Debentures cannot be secured

  3. A company can issue redeemable debentures

  4. Debenture have no right to participate in profits over and above their fixed interest.

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Correct Option: B
Explanation:

A debenture is a type of debt instrument unsecured by collateral. Since debentures have no collateral backing, debentures must rely on the creditworthiness and reputation of the issuer for support. 

Companies may issue the debentures as security against loans taken from banks/financial institutions as _______.

book keeping and accountancy company accounts part - 2 (accounting for debentures) types of issue of debentures types of debentures meaning and kinds of debentures

  1. Principal

  2. Primary

  3. Collateral

  4. Chargeable

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Correct Option: C
Explanation:

Debentures can be issued as a collateral security against the loan taken from banks or financial institutions.

Debentures can be_____.
a. Mortgage Debenture or Simple Debenture.
b. Registered Debenture or Bearer Debenture.
c. Redeemable Debenture or Irredeemable Debenture.
d. Convertible Debenture or Non-convertible Debenture

book keeping and accountancy company accounts part - 2 (accounting for debentures) types of issue of debentures types of debentures meaning and kinds of debentures

  1. Both (a) and (b)

  2. Both (a) and (c)

  3. Both (b) and (c)

  4. All of (a), (b), (c) and (d) above

Show answer
Correct Option: D
Explanation:

Debenture is a written instrument acknowledging a debt under the common seal of the company. There are various types of debentures: Secured and unsecured debentures, redeemable and irredeemable debentures, Convertible and non-convertible debenture, registered and bearer debentures, Specific coupon rate and zero coupon rate debentures etc. 

Receipts and payment account shows ___________.

book keeping and accountancy accounts of 'not for profit' concerns receipts and payments receipts and payments account prepration of income and expenditure account prepration of income and expenditure account and balance sheet

  1. income and expenditure

  2. cash receipts and payments

  3. assets and liabilities

  4. profit on sale

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Correct Option: B
Explanation:

Receipts and payments account is prepared by taking the information from cash book. It records all the cash receipts and payments including revenue and capital.

Expenditure incurred by a publisher for acquiring copyrights is an example of _______________.

book keeping and accountancy accounts of 'not for profit' concerns receipts and payments receipts and payments account prepration of income and expenditure account prepration of income and expenditure account and balance sheet

  1. Capital expenditure

  2. Revenue expenditure

  3. Deferred revenue expenditure

  4. None of the above

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Correct Option: A
Explanation:

A capital expenditure is a expenditure to acquire and maintain long term assets. Capital expenditure is done on more valuable assets that have long term use in the business. Long term usually means more than a year. Expenditure incurred by a publisher for acquiring copyrights is an example of Capital expenditure.

Which of the following accounts mostly begins with an opening balance?

book keeping and accountancy accounts of 'not for profit' concerns receipts and payments receipts and payments account prepration of income and expenditure account prepration of income and expenditure account and balance sheet

  1. Receipts and payments account

  2. Income and expenditure

  3. Both of the above

  4. None of the above

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Correct Option: A
Explanation:

Receipts and payments account mostly begin with an opening balance as it is nothing but cash account. A receipts and payment account is just like a cash account hence it begins with opening balance and ends with closing balance of cash.