Accounting MCQ on Debentures

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  1. Financial Accounting MCQ

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
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