Chapter Exam

Chapter 6: Issue of Debentures — Online MCQ Test

Q: A debenture is generally regarded as a:

Answer: B. Certificate of debt issued by a company — A debenture is an acknowledgement of debt by a company. It represents borrowed funds and not ownership capital.

Q: In the Balance Sheet of a company, debentures are normally shown under:

Answer: B. Non-current Liabilities — Debentures are long-term borrowings of a company. Therefore, they are generally shown under Non-current Liabilities.

Q: A company issued 1,000 debentures of ₹100 each at par. What amount will be credited to Debentures Account?

Answer: B. ₹1,00,000 — Debentures Account is credited with the nominal value of debentures issued. Here, 1,000 × ₹100 = ₹1,00,000.

Q: A company issued 1,000 debentures of ₹100 each at 10% discount, redeemable at 10% premium. What is the total amount debited to Loss on Issue of Debentures Account?

Answer: B. ₹20,000 — Loss includes discount on issue of ₹10,000 and premium on redemption of ₹10,000. Total loss = ₹20,000.

Q: A company purchased a business for ₹7,20,000 and discharged the purchase consideration by issuing debentures of ₹100 each at 20% premium. How many debentures were issued?

Answer: A. 6,000 debentures — Issue price per debenture = ₹100 + 20% = ₹120. Number of debentures = ₹7,20,000 ÷ ₹120 = 6,000.

ACCOUNTANCY · Grade 12 · CBSE(NCERT)

Practice Chapter 6: Issue of Debentures with a free chapter-wise online MCQ test for CBSE(NCERT) Grade 12 ACCOUNTANCY. This chapter covers: Debentures Corporate Debt Issue of Debentures Discount Premium Redemption Collateral Security Debenture Redemption Journal Entries Long Term Borrowings Consideration Other Than Cas.... AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 6: Issue of Debentures — Important Questions & Answers (FAQ)

Frequently asked questions from CBSE(NCERT) Grade 12 ACCOUNTANCY — Chapter 6: Issue of Debentures, with answers and explanations. These are sample questions; the exam has its own separate question set.

A debenture is generally regarded as a:

A. Certificate of ownership in a company
B. Certificate of debt issued by a company ✓
C. Part of share capital
D. Reserve created out of profit

Answer: B. Certificate of debt issued by a company
A debenture is an acknowledgement of debt by a company. It represents borrowed funds and not ownership capital.

In the Balance Sheet of a company, debentures are normally shown under:

A. Shareholders' Funds
B. Non-current Liabilities ✓
C. Current Assets
D. Reserves and Surplus

Answer: B. Non-current Liabilities
Debentures are long-term borrowings of a company. Therefore, they are generally shown under Non-current Liabilities.

A company issued 1,000 debentures of ₹100 each at par. What amount will be credited to Debentures Account?

A. ₹90,000
B. ₹1,00,000 ✓
C. ₹1,10,000
D. ₹10,000

Answer: B. ₹1,00,000
Debentures Account is credited with the nominal value of debentures issued. Here, 1,000 × ₹100 = ₹1,00,000.

A company issued 1,000 debentures of ₹100 each at 10% discount, redeemable at 10% premium. What is the total amount debited to Loss on Issue of Debentures Account?

A. ₹10,000
B. ₹20,000 ✓
C. ₹90,000
D. ₹1,10,000

Answer: B. ₹20,000
Loss includes discount on issue of ₹10,000 and premium on redemption of ₹10,000. Total loss = ₹20,000.

A company purchased a business for ₹7,20,000 and discharged the purchase consideration by issuing debentures of ₹100 each at 20% premium. How many debentures were issued?