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    Xii Mcqs CH - 11 Redemption of Debentures

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    Joanna Garcia
    The document contains 20 multiple choice questions and 5 true/false statements about redemption of debentures. It tests knowledge of key principles like when a debenture redemption reserve must be set aside, what account types are involved in premiums on redemption, and rules around transferring amounts from the reserve. The document also has fill-in-the-blank and true/false questions to reinforce understanding of debenture redemption requirements.

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    Xii Mcqs CH - 11 Redemption of Debentures

    Uploaded by

    Joanna Garcia
    610 views4 pages
    The document contains 20 multiple choice questions and 5 true/false statements about redemption of debentures. It tests knowledge of key principles like when a debenture redemption reserve must be set aside, what account types are involved in premiums on redemption, and rules around transferring amounts from the reserve. The document also has fill-in-the-blank and true/false questions to reinforce understanding of debenture redemption requirements.

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    Xii Mcqs Ch - 11 Redemption of Debentures

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    The document contains 20 multiple choice questions and 5 true/false statements about redemption of debentures. It tests knowledge of key principles like when a debenture redemption reserve must be set aside, what account types are involved in premiums on redemption, and rules around transferring amounts from the reserve. The document also has fill-in-the-blank and true/false questions to reinforce understanding of debenture redemption requirements.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    610 views4 pages

    Xii Mcqs CH - 11 Redemption of Debentures

    Uploaded by

    Joanna Garcia
    The document contains 20 multiple choice questions and 5 true/false statements about redemption of debentures. It tests knowledge of key principles like when a debenture redemption reserve must be set aside, what account types are involved in premiums on redemption, and rules around transferring amounts from the reserve. The document also has fill-in-the-blank and true/false questions to reinforce understanding of debenture redemption requirements.

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    © All Rights Reserved
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    of 4

    CH – 11: MCQs REDEMPTION OF DEBENTURES

    Q1 If debentures of Rs 50,000 are issued at par but redeemable at a premium of 10%. By what principle
    of accounting, the loss on issue of debentures account will be debited with ` 5,000 while passing the
    issue entry ?
    (a) Principle of Revenue recognition
    (b) Principle of Materiality
    (c) Principle of Conservatism/Prudence
    (d) Principle of Full Disclosure.

    Q2. X Ltd. has issued 10,000 6% debentures of ` 100 each. The company decided to redeem half of its
    debentures at 10% premium. There was a balance of ` 3,40,000 in Debenture redemption reserve. As per
    SEBI guidelines what amount still need to be transferred to Debenture redemption reserve account out
    of profits.
    (a) Rs6,60,000
    (b) Rs1,60,000
    (c) Rs 5,50,000
    (d) Rs 2,75,000

    Q3. The rules regarding transfer of DRR to general reserve is mentioned in


    a.Companies Ac 2013
    b.Rule 18(7)(c) of Companies Rule 2014
    c.Section 71(4) of Companies (Share Capital and Debentures) Rules,2014
    d. All of the above.

    Q4Alfa Ltd. issued 20,000, 8% debentures of Rs 10 each at par. The debentures are redeemable at a
    premium of 20% after 5 years. The amount of loss on redemption of debentures should be:
    (a) Rs 50,000
    (b) Rs 40,000
    (c) Rs 30,000
    (d) Rs 16,000

    Q5. Debenture redemption reserve is created


    a.before redemption starts
    b.at the closure of previos accounting year
    c.before 30th April of the current year
    d.all the above.

    Q6 Premium on redemption of debentures is a


    (a) Liability account
    (b) Asset Account
    (c) Expense Account
    (d) None of these.

    Q7 . Gaurav Ltd. purchased machinery costing Rs 1,71,000. It was agreed that the purchase
    consideration be paid by issuing 12% debentures of Rs 100 each. Assume debentures have been issued
    at a discount of 10%. No. of debentures issued to vendor are:
    (a) 1500
    (b) 1900
    (c) 2000
    (d) 2100

    Q8 In case the question is silent, DRR is created on the nominal value of outstanding redeemable
    debentures to the extent of
    a.25%
    b.15%
    c.more than 25%
    d.any of the above

    Q9 Debentures cannot be redeemed at


    a. Premium
    b. Discount
    c more than 10% premium
    d.at Par

    Q10 If debentures are issued at par and redeemed at a premium then which account will be debited by
    the amount of premium on debentures.
    a. Discount on issue of debentures
    c. Premium on redemption of debentures
    c. Profit and loss account
    d. Loss on issue of debentures

    Q11 The provisions of the Companies Act 2013 in respect of redemption of debentures are to protect
    the interest of
    a)Debetureholders
    b)Creditors
    c)Shareholdres
    d)Bankers

    Q12 Best Company Ltd decides to redeem 10000 ,10% debentures of Rs 100 each on 30th June 2018.The
    Company shall invest in specified securities on or before
    a. 30th April 2017
    b. 30th April 2016
    c. 30th June 2017
    d. 30th April 2018

    Q13 Amount is set aside to Debenture redemption reserve (DRR) by


    a. All the Companies
    b. All companies except banking companies
    c. All Companies except All India Financial Institutions
    d. All Companies except Banking Company and all India Financial Institutions regulated by RBI.

    Q14 Amount is not set aside to Debenture redemption reserve if


    a. The debentures are not convertible
    b. The debentures are partly convertible
    c. The debentures are fully convertible.
    d None of these.

    Q15 Premium payable on redemption of debentures is in the nature of


    a. Liability Account
    b. Asset Account
    c. Expense Account
    d. None of these.

    Q16 Once the debentures are redeemed, amount of debenture redemption reserve is transferred to
    a. Capital Reserve
    b. Balance in Profit and loss account
    c. General Reserve
    d. Capital Redemption reserve

    Q17 G Limited has outstanding 10000 8% debentures of Rs 100 each that are redeemable at a premium
    of Rs 10.Out of these 5000 debentures are to be redeemed on 31st December 2018 Debenture redemption
    Investment should be
    a.75,000
    b.82,500
    c.1,50,000
    d.1,65,000

    Q18 Global savings Bank is to redeem 40000 10% debentures of Rs 100 each on 31st December
    2018.How much amount should it invest in specified securities?
    a.6,00,000
    b.10,00,000
    c. 5,00,000
    d. Nil

    Q19 H Limited has outstanding 10,000 , 8% debentures of Rs 100 each that are redeemable at a
    premium of Rs 10 each. Out of these 5000 debentures are to be redeemed on 31st December
    2018.Denture redemption investment should be
    a.75,000
    b. 82,500
    c. 1,50,000
    d.1,65,000

    Q20 Amount is not invested in debenture redemption Investment if


    a. Debentures are not convertible
    b. The debentures are partly convertible
    c. The debentures are fully convertible
    d. None of the above.

    Fill in the Blanks

    1. Debentures are redeemed setting aside 25% of the nominal value of debentures to Debenture
    Redemption Reserve .It is redemption out of _______________
    2. Amount to be set aside to ____________before redemption of debentures.
    3. Debenture Redemption Investment should be made _____________30th April of the year in
    which debentures re redeemed.
    4. Discount or loss on issue of debentures is a ______________
    5. Once the debentures re redeemed ,amount of DRR is transferred to _____________

    State True of False

    1. Debenture Redemption Investment is made by companies required to set aside amount to


    Debenture redemption Reserve.
    2.Debenture redemption reserve may be set aside by a company out of any reserve.
    3.Surplus cannot be transferred to Debenture Redemption Reserve.
    4.Debenture Redemption Investment can be used by the Company for any purpose after the
    debentures have been redeemed.
    5.General Reserve can be transferred to Debenture Redemption Reserve.

    ANSWER KEY

    REDEMPTION OF DEBENTURES

    Ques 1 2 3 4 5 6 7 8 9 10
    No
    ns c b a b a a b a b d

    Ques 11 12 13 14 15 16 17 18 19 20
    No
    ns a d d c a a a d a c

    Fill in the Blanks

    Ques 1 2 3 4 5
    No
    ns Profit DRR On or Capita Gener
    and before l loss al
    capita reserv
    l e

    True or False

    Ques 1 2 3 4 5
    No
    ns T F F T T

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