Redemption of Debentures

Q.

What is meant by redemption of debentures by conversion?

Q. A debenture holder is entitled to .

1. fixed dividend
2. share in profits
3. voting rights
4. fixed rate interest

Q.

Can the company purchase its own debentures?

Q.

Debentures represent ____ of the company.

1. Fixed capital

2. Permanent capital

3. Fluctuating capital

4. Loan capital

Q.

A debentureholder is entitled to :

1. fixed dividend

2. share in profits

3. voting rights in the company

4. interest at the fixed rate

Q.

The journal entry for Premium on redemption of debentures while transfer to debentureholders-

1. None of these

2. 1840

3. 1600

4. 1000

Q.

The journal entry for receipt of application money-

1. None of these

2. Loss

3. Capital

4. Profits

Q.

Debentures can be redeemed :

1. By annual drawings

2. By purchase in the open market

3. By conversion

4. By all of these

Q.

Explain the guidelines of SEBI for creating Debenture Redemption Reserve.

Q.

What is meant by ‘Redemption out of Capital?

Q. When debentures are repaid ___ a/c is debited and ___ is credited.

1. Debentures holders, Bank
2. Debenture Suspense, Debentures
3. Bank, Debentures holders
4. None of the above

Q. of debentures refer to extinguishing or discharging the liability on account of debentures as per the terms of issue.

1. Issue
2. Redemption
3. Allotment
4. Application

Q. A company should at least have of the value of outstanding debentures in their debenture redemption reserve before redeeming the debentures.

1. 15%
2. 25%
3. 30%
4. 50%

Q. The following balances have been extracted from the books of Vanity Ltd. as at 31${}^{st}$ March, 2017:
Trial Balance as at 31${}^{st}$ March, 2017

Particulars	Debit (Rs.)	Credit (Rs.)
Equity Share Capital ($5,000$ share of $Rs.100$ each fully paid)		$5,00,000$
Fixed Assets	$7,30,000$
Reserves Surplus		$2,00,000$
Inventories	$50,000$
Cash and Bank Balances	$1,70,000$
Creditors		$40,000$
Bill Payable		$20,000$
Underwriting Commission on issue of shares	$10,000$
$5\%$ Debentures ($\frac{1}{5}$ of the Debentures to be redeemed on 31${}^{st}$ March, 2018)		$2,00,000$
Proposed Dividend		$12,000$
Interest accrued and due on $5\%$ Debentures		$8,000$
Trade Receivables	$20,000$
TOTAL	$\overline{\underset{–}{9,80,000}}$	$\overline{\underset{–}{9,80,000}}$

You are required to prepare as at 31${}^{st}$ March, 2017:
(i) The Balance Sheet of Vanity Ltd. as per Schedule III of the Companies Act, 2013
(ii) Notes to Accounts.

Q.

What is meant by conversion of debentures? Describe the method of such a conversion.

Q.

A company should at least have how much % of the value of outstanding debentures in their debenture redemption reserve before redeeming the debentures?

1. 50%

2. 15%

3. 30%

4. 25%

Q.

The journal entry for payment to debentureholders

1. None of these

2. Capital reserve

3. Debenture redemption reserve

4. General reserve

Q.

What is a debenture simple definition?

Q.

What is meant by a Debenture?

Q.

What type of instrument is debenture?

Q. Only withdrawal slip is used by the account holder for withdrawal of cash from the bank.

1. True
2. False

Q. Which of the following books serves both as journal and ledger?

1. Sales Return book
2. Cash book
3. Sales journal
4. Purchase returns book

Q.

How to calculate the salvage value of fixed assets?

Q.

___of debentures refers to extinguishing or discharging the liability on account of debentures in accordance with the terms of issue.

1. None of these

2. Redemption

3. Allottment

4. Issue

Q. Objective type questions.
Answer in are sentence only.

What do you mean by ‘Debenture Interest’?

Q. Purchases journal (also called Purchase book or Invoice book or Invoice journal) is used for recording ________________.

1. None of these
2. Cash purchases
3. Credit purchases
4. Total purchases

Q. Sort the questions in the order of occurrence of an event relating to debentures.

1. Application
2. Allotment
3. Calls
4. Redemption

Q.

The debentures can be redeemed ______.

1. In Lumpsum only

2. In Installments only

3. Either in Lumpsum or in Installment

4. None of these

Q. Petty cashier records petty cash received on debit side.

1. True
2. False

Q.

____________ means repayment of the amount of debentures to debentureholders.

1. None of these

2. Rs 20, 000

3. Rs 25, 000

4. Rs 9200