Xii Mcqs CH - 10 Issue of Debentures

ISSUE OF DEBENTURES
FOR QUESTION BANK
CH- 10: MCQs ISSUE OF DEBENTURES
A. Choose the correct alternative for the following:
1. Debentures which are transferable by mere delivery are

a. registered debentures
b. first debentures
c. bearer debentures
d. second debentures.
2. When debentures are issued at par and redeemable and premium the loss on
such an issue is debited to:
a. profit and loss account
b. debenture application and allotment account
c. loss on issue of debentures account
d. discount on issue of debentures account.
3. Excess value of net assets over purchase consideration at the time of

purchase of business is credited to:
a. General reserve
b. Capital reserve
c. Vendor's account
d. Goodwill account.
4. When debentures are issued at discount and redeemable at a premium which

one of the following account is debited at the time of issue ?
a. debentures account
b. premium on redemption of debentures account
c. loss on issue of debentures account
d. none of these.
5. ABC took over the assets of Rs7,60,000 and liabilities of Rs80,000 of Y

limited for purchase consideration of Rs5,85,000 payable by the issue of 12%
debentures of Rs100 each at a discount of 10%. The number of debentures to
be issued is:
a. 6600
b. 6500
c. 4500
d. 5400.

6. XYZ limited issued 4000,12% debentures of Rs100 each at a premium of

5% .the total amount of interest for one year will be:
a. 48,000
b. 58,000
c. 50,000
1
ISSUE OF DEBENTURES
d. 50,400.
7. ABC limited issues 10,000 9% debentures of 100 each at a premium of 5%

payable at a premium of 10%, the loss on issue of debentures account will be
debited to by:
a. Rs10,00,000
b. Rs1,00,000
c. Rs10,50,000
d. Rs1,05,000
8. Premium received on issue of debentures may be utilised for writing off:

a. premium allowed on redemption of debentures
b. writing off preliminary expenses
c. writing off discount allowed on issue of shares
d. all of the above.
9. A company can issue debentures

a. for cash
b. as a collateral security
c. for consideration other than cash
d. any of the above.
10. What is the nature of premium on redemption of debenture account

a. Real account
b. nominal account
c. personal account
d. none of the above.
11. When the number of debentures applied is less than number of debentures
offered to public the issue is said to be :
a. oversubscribed
b. under subscribe
c. Fully subscribed
12. Maximum limit on premium on issue of debentures is

a. 10%
b. 20%
c. 15%
d. no limit.
13. Debentures that do not carry any charge or security on assets of the company
are known as:
a. secured debentures
b. unsecured debentures
c. convertible debentures
d. registered debentures.
14. Debenture is:

a. written instrument acknowledging a debt written by its holder.
2
ISSUE OF DEBENTURES
b. An oral acknowledgement of debt by a company

c. A written instrument acknowledging a debt written by its company
d. None of these.
15. Interest on debenture is calculated on:

a. its face value
b. its issue price
c. its book value
d. its cost price.
16. Debentures issued as collateral security will be______ to debenture suspense

account:
a. debited
b. credited
c. sometimes debited and sometimes credited
d. none of these.
17. Collateral security means ___________security:

a. primary
b. secondary
c. government
d. valuable.
18. 10% debenture issued at Rs105 is repayable at Rs110, the face value of
debenture being Rs100. Calculate the amount of loss on redemption of
debentures:
a. 10
b. 5
c. 15
d. 25.
19. A ltd took over the assets of Rs6,60,000 and liabilities of Rs80,000 of B Ltd
for an agreed purchase consideration of Rs6,00,000 payable 10% in cash
and the balance by issue of 15% debentures of Rs100 each at 10% discount.
The number of debentures to be issued is:
a. 6600
b. 5400
c. 6000
d. 4500
20. Debenture interest:

a. is payable only in case of profits
b. accumulates in case of losses are inadequate profits
c. is payable irrespective of profit or loss
Answers:
3
ISSUE OF DEBENTURES
1.c 2.c 3. b 4.C 5. B

6. A 7.B 8. D 9. D 10. C
11. 12. D 13. B 14. 15. A
B C
16. 17. B 18. A 19. 20. C
A C
B. FILL IN THE BLANKS:
1. Interest on debentures is paid on the _____________of Debentures.

2. If X ltd purchased plant worth Rs5 lakh from Y ltd but agreed to issue 5250 10%
Debentures of Rs100 each to Vendor. The difference in the amount will be adjusted in
____________account.
3. _____________is the rate at which interest is payable on Debentures.
4. __________________Debentures are not secured with a specific asset rather they are
secured on all the assets of the company in general.
5. If X ltd issued 1,000; 10% Debentures of Rs100 each at a discount of 5% but
redeemable after 4 years at a premium of 6%, loss on issue of Debentures a/c will be
debited by _______________________.
[Answers: 1.Face value; 2. goodwill; 3. coupon rate ; 4. floating; 5. Rs11,000 ]

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ISSUE OF DEBENTURES

FOR QUESTION BANK

CH- 10: MCQs ISSUE OF DEBENTURES

A. Choose the correct alternative for the following:

1. Debentures which are transferable by mere delivery are

3. Excess value of net assets over purchase consideration at the time of

4. When debentures are issued at discount and redeemable at a premium which

5. ABC took over the assets of Rs7,60,000 and liabilities of Rs80,000 of Y

6. XYZ limited issued 4000,12% debentures of Rs100 each at a premium of

7. ABC limited issues 10,000 9% debentures of 100 each at a premium of 5%

8. Premium received on issue of debentures may be utilised for writing off:

9. A company can issue debentures

10. What is the nature of premium on redemption of debenture account

12. Maximum limit on premium on issue of debentures is

14. Debenture is:

b. An oral acknowledgement of debt by a company

15. Interest on debenture is calculated on:

16. Debentures issued as collateral security will be______ to debenture suspense

17. Collateral security means ___________security:

20. Debenture interest:

1.c 2.c 3. b 4.C 5. B

B. FILL IN THE BLANKS:

1. Interest on debentures is paid on the _____________of Debentures.

[Answers: 1.Face value; 2. goodwill; 3. coupon rate ; 4. floating; 5. Rs11,000 ]

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