Tag: book keeping and accountancy

Quizzes (126) Questions (1524)

Questions Related to book keeping and accountancy

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

Which of the following is false?

  1. A company can issue bearer debentures.

  2. A company can issue convertible debentures.

  3. A company can issue redeemable debentures.

  4. A company can issue debentures with voting rights.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Debentures are debt instruments and do not carry voting rights, which are reserved for equity shareholders. The other options are valid types of debentures.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

The following entry appears in the bools of Vikas Ltd 

BankA/c 1,90,000
Loss on issue of Debenture A/c 26,000
To 9% Debentures A/c 2,00,000
To Premium on Redemption of Debentures A/c 16,000
Debentures have been issued at a discount of 

  1. 10%

  2. 7%

  3. 6%

  4. 5%
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The face value is 2,00,000. The cash received is 1,90,000. The difference is 10,000. However, the loss on issue is 26,000, which includes the 16,000 premium on redemption. Thus, the discount is 26,000 - 16,000 = 10,000. 10,000 / 2,00,000 = 5%.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

An unsecured bond that provides no lien against property as security for bond obligation is classified as _____________.

  1. secured bond

  2. debenture

  3. obligation bond

  4. specific bond
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A debenture is a long-term debt instrument that is not secured by physical assets or collateral, making it an unsecured bond.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

Shares and debentures of blue chip companies are ___________ .

  1. Money market investment

  2. Capital market investment

  3. Gilt-edged securities

  4. Any of these depending on certain factors
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Blue chip companies' shares and debentures are traded in the capital market, which deals with long-term securities.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

On 1st April, 2013, Y Ltd. Issued 1000, 12% debentures of Rs. 100 each at a discount of 6%. These debentures are redeemable in five equal annual instalments at the end of each year. What is the amount of discount to be written off in the first year i.e.

  1. Rs. 2000

  2. Rs. 1800

  3. Rs. 1200

  4. Rs. 600
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Total discount = 1000 * 100 * 0.06 = 6000. Since they are redeemed in 5 equal annual installments, the discount is written off proportionally. 6000 / 5 = 1200 per year.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

Debentures can be redeemed by :

  1. Purchase of own debentures in the open market

  2. Converting them into new class of debentures

  3. Converting them into shares

  4. Any of the methods mentioned in (A), (B) and (C)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Debentures can be redeemed through various methods, including open market purchases, conversion into new debentures, or conversion into equity shares.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

The premium on issue of shares (whether received in cash or in kind) is a:

  1. Revenue receipt

  2. Capital receipt

  3. Neither revenue nor capital receipt

  4. Both revenue and capital receipts
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Premium on the issue of shares is a capital receipt because it is a gain of a capital nature, not arising from the normal course of business operations.