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MCQ on Debentures
1. Debentures are :
(a) Investments by equity shareholders
(b) Long-term liabilities of a business
(c) Directors’ share in a company
(d) None of these
ANS. (b) Long-term liabilities of a business
2. Debentureholders are:
(a) Owners of the company
(b) Customers of the company
(c) Creditors of the company
(d) Promoters of the company
ANS. (c) Creditors of the company
3. A debentureholder gets:
(a) Dividend
(b) Commission
(c) Interest
(d) Salary
ANS. (c) Interest
4. Debentures issued as collateral security will be debited to:
(a) Debentures Account
(b) Debenture Suspense Account
(c) Bank Account
(d) None of these
ANS. (b) Debenture Suspense Account
5. Premium on Redemption of Debentures A/c is:
(a) Asset
(b) Liability
(c) Expense
(d) Revenue
ANS. (b) Liability
6. Those debentures in which the holders are given option to partially or fully convert into equity shares after a specified period are known as:
(a) Registered Debenture
(b) Mortgage Debenture
(c) Naked Debenture
(d) Convertible Debenture
ANS. (d) Convertible Debenture
7. In the Balance Sheet of the company, debentures are shown under the head of:
(a) Current Liabilities
(b) Non-Current Liabilities
(c) Current Assets
(d) Share Capital
ANS. (b) Non-Current Liabilities
8. Which of the following is a type of debenture?
(a) Redeemable Debentures
(b) Convertible Debentures
(c) Secured Debentures
(d) All of the above
ANS. (d) All of the above
9. Debentures which do not carry any specific rate of interest are known as :
(a) Registered Debentures
(b) Bearer Debentures
(c) Zero Coupon Rate Debentures
(d) First Debentures
ANS. (c) Zero Coupon Rate Debentures
10. Debentures cannot be issued:
(a) for cash
(b) as Collateral Security
(c) for memorandum of association
(d) for consideration other than cash
ANS. (c) for memorandum of association
11. Debentures can be issued at:
(a) Par
(b) Premium
(c) discounts
(d) All of the above
ANS. (d) All of the above
12. A Debenture of Rs.100 is issued for Rs. 110, it is a case of debentures issued :
(a) at Par
(b) at Premium
(c) at discounts
(d) None of the above
ANS. (b) at Premium
13. The loss on issue of debentures is :
(a) Capital Loss
(b) Capital Profit
(c) Revenue loss
(d) All of the above
ANS. (a) Capital Loss
14. The discount on issue of debentures are part of:
(a) Borrowing Costs
(b) Preliminary expenses
(c) Intangible assets
(d) None of the above
ANS. (a) Borrowing Costs
15. Premium on issue of debentures for a company is :
(a) Revenue Receipts
(b) Capital Receipts
(c) Assets
(d) Profit
ANS. (b) Capital Receipts
16. Interest on debentures is :
(a) Appropriation of profit
(b) Capital gain
(c) Charge against profit
(d) Dividend
ANS. (c) Charge against profit
17. Debentures cannot be redeemed:
(a) at par
(b) at premium
(c) at discount
(d) all of the above
ANS. (c) at discount
18. Loss on issue of debentures can be written off from:
(a) Securities premium reserve
(b) Profit and Loss account
(c) Both (a) and (b)
(d) None of the above
ANS. (c) Both (a) and (b)
19. Debenture interest is paid:
(a) at a predetermined rate
(b) at variable rates
(c) at a proportion of net profit
(d) None of the above
ANS. (a) at a predetermined rate
20. The debentures which are to be repaid before the other debentures are known as :
(a) Secured debentures
(b) First debentures
(c) Registered debentures
(d) Specific coupon rate debentures
ANS. (b) First debentures
