Tag: book keeping and accountancy

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Questions Related to book keeping and accountancy

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

Redeemable debentures are those which are payable on the expiry of the ______ period either in lump sum or in installments during the life time of the company. 

  1. Specific

  2. Actual

  3. Indefinite

  4. Average
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

There are two type of debenture which are classified from the point of view of tenure i.e. 1. Redeemable debentures and 2. Irredeemable debentures.

Redeemable dentures are those which are payable on the expiry of the specific period either in lump sum or in installments during the life time of the company. Debentures can be redeemed either at par or at premium .

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

Debentureholders having a floating charge have priority in payment over _________________.

  1. Sundry Creditors

  2. Secured Creditors

  3. Unsecured Creditors

  4. Preferential Creditors
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

 A debenture is a document that lays down the terms and conditions of a loan, and provides clarity and security to lenders if the borrowing company becomes insolvent. Attaching a floating charge to the debenture offers further benefits, enabling the holder to rank above unsecured creditors when it comes to repayment.

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

The term debenture includes _________.

  1. debenture stock

  2. bonds

  3. any other securities of a company whether constituting a charge on the assets of the company or not

  4. all of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The legal definition of a debenture is broad and includes debenture stock, bonds, and any other securities of a company, regardless of whether they are secured by a charge on assets.

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

Debentures entails payment of fixed rate of interest until ____________.

  1. the company is not declared insolvent

  2. the principal sum is repaid

  3. the company desires not to pay

  4. the debenture holders resolves not to claim so
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Debentures are debt instruments. The company is obligated to pay interest at a fixed rate until the principal amount is repaid to the debenture holder at the time of maturity.

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

_____are those debentures where the debenture holder have no option to convert into equity.

  1. Optional debentures

  2. Flexible debentures

  3. Convertible debentures

  4. Non-convertible
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Non-convertible debentures are those that do not offer the holder the option to convert the debt into equity shares. They remain debt instruments until maturity.

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

Issue of debentures as collateral securities means issue of such debentures as _________.

  1. Subsidiary security

  2. Principal security

  3. In lieu of principal security

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Issue of Debentures as Collateral. Debentures issued as collateral security is secondary or parallel security for the original loan taken by the company. The lender can realize the collateral security in case borrower fails to make the payment of the original loan.

A Collateral Security is a Subsidiary Security.

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

Which of the following statement is not true?

  1. Interest on debenture holders is to be paid whether there is profit or loss to the company

  2. There is restriction on utilization of premium on issue of shares

  3. Company can buy back its debentures

  4. Interest on debenture is not shown in Profit and Loss A/c
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Interest on debentures is a charge against profit, meaning it must be paid regardless of profit or loss and is recorded in the Profit and Loss Account as an expense.

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

______ are secured by either a fixed charge or a floating charge.

  1. Naked debentures

  2. Unsecured debentures

  3. Mortgaged debentures

  4. Registered debentures
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Mortgaged debentures are secured by a charge on the assets of the company. A fixed charge applies to specific assets, while a floating charge applies to current assets.

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

Debentures which are not secured by any charge upon any assets of the company are called __________.

  1. secured debenture

  2. naked debenture

  3. bearer debenture

  4. floating debenture
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Naked debentures, also known as unsecured debentures, are those that do not carry any charge or security on the assets of the company.

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

_______debentures are those which can be transferred by mere delivery.

  1. Naked

  2. Registered

  3. Bearer

  4. Floating
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Bearer debentures are negotiable instruments that can be transferred by simple delivery, meaning the holder at the time is entitled to the interest and principal.