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CS Executive Practice Test: Issue & Redemption of Debentures – Corporate and Management Accounting
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CS Executive Practice Test: Issue & Redemption of Debentures – Corporate and Management Accounting
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25 Questions

1. If nothing is stated, purchase & sale of debentures, government securities should be taken to be on
2. Every company required to create DRR shall on or before the 30th day of April in each year, invest or deposit, as the case may be, a sum which shall 7.5 not be less than, of the number of its debentures maturing during the year ending on the 31st day of March of the next year
3. When debentures are issued as collateral security against any loan then the holder of such debentures is entitled to:
4. As a sound accounting policy when debentures are redeemed amount equal to
5. Statement I:
Debentures can be converted into shares as per the terms of the issue of debentures.
Statement II:
Shares cannot be converted into debentures in any circumstances.
Select the correct answer from the options given below
6. If the purchase price for the debentures includes interest for the expired period, the quotation is said to be
7. Which of the following statements is FALSE
8. Debenture interest
9. Debenture redemption fund investment account will appear on the assets side of the balance sheet under the head, while debenture redemption fund account will appear on the liabilities side under the head
10. Debentures Suspense Account
11. “Interest accrued & due on debentures' is shown
12. Tax deducted at source on interest on debenture is shown as
13. Arrange the priority of payment in case of liquidation of the company:
I. Preference shares holders
II. Secured creditors
III. Equity shareholders
IV. Unsecured creditors
V. Debenture holders
Select the correct answer from the options given below
14. If the company acquires some assets from the vendor and instead of paying the vendor in cash, the company may allot debentures in payment of purchase consideration. In such case, if the face value of debentures issued is more than the value of assets acquired then the difference will be
15. Sound business policy demands that discount on the issue of debenture should be written off
16. Debentures normally cannot be redeemed at
17. Another name of Debenture Redemption Fund Method is
18. Non convertible debentures refer to
19. Interest on debentures is calculated on:
20. Which of the following is not required to create Debenture Redemption Reserve
21. If debentures are issued at discount but redeemable at a premium then
22. Following balances appeared in the books of JKJ Ltd.:
(a) Sinking fund account ₹ 62,500
(b) Sinking fund investment account ₹ 60,000( 10% Govt, securities, nominal value ₹ 56,250)
(c) 12% Debenture account ₹ 1,25,000.
The company sold ₹ 37,500 Govt, securities at 110% and redeemed part of the debentures at a premium of 10%. The closing balance of Sinking Fund A/c will be
23. Discount on issue of debentures, being a capital loss must be shown
24. Debentures can be
I. Mortgage Debentures or Simple Debentures.
II. Registered Debentures or Bearer Debentures.
III. Redeemable Debentures or Irredeemable Debentures.
IV. Convertible Debentures or Non-convertible Debentures
Select the correct answer from the options given below
25. Which of the following statements is TRUE?

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